The New Mexico State Investment Council authorized increasing the target allocations for private equity and real assets for the roughly $14 billion Land Grant Permanent Fund it oversees.
Long-term allocation targets for private equity and real assets are each slated to rise to 12% from 10% in the portfolio, said Charles Wollmann, a spokesman for the state investment council. Trustees voted to change the portfolio’s composition Aug. 26.
“We think that private equity, real estate and real return will offer additional upside over the coming decade,” Mr. Wollmann said.
New Mexico is expecting to commit $750 million to private equity and an additional $400 million to real assets limited partnerships between Jan. 1, 2014, and June 30, 2015.
New Mexico’s investment team is projecting that an “average to below average” economic growth will limit profit generation and revenue creation, according to an investment report for the 18 months beginning in January.
In response, staff recommended a tilt in favor of private equity over public equity, summary notes of an Aug. 14 investment committee meeting indicate.
The team’s view is that private equity strategies “are less dependent on revenue growth for their returns” and instead, involve “driving profit growth through margin expansion,” according to an investment blueprint document.