Investor profile: Washington State doubles down on private markets

The Washington State Investment Board (WSIB) is more committed to private markets than most of its institutional peers, recently allocating nearly half of its $120.4bn in assets to private equity, real estate and tangible assets.

The new allocation doubles down on Washington State’s already aggressive commitment to private markets, widening the gap with other public pension funds, most of whom favor higher targets for global and domestic public equity – asset classes that have offered high returns at relatively low costs since the 2008 financial crash.

CIO Gary Bruebaker acknowledges that Washington State is something of an outlier in its asset allocation strategy, but said the reason behind it is simple – Washington expects private markets to outperform public markets over the long term.

“Our since-inception [1981] return is 484 basis points higher than our public equity return,” Bruebaker told MMR. “Securing the financial future for over 400,000 public employees is the reason we invest in private markets.”

At its September meeting, the board approved a four-year asset allocation strategy that cuts its public equity target from 37% to 32% and uses those savings to increase real estate from 15% to 18% and tangible assets from 5% to 7%. The board left both fixed income and private equity unchanged, at 20% and 23%, respectively, but would have
committed more to private equity if it thought it could realistically achieve those goals, Bruebaker said.

Read the full story: Investor profile: Washington State doubles down on private markets

Published by Money Management Report/Pageant Media.

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