Diversity is usually a cardinal rule for success in investing, but a mixture of multi-stage, stage-targeted, fund of funds and secondary investments has failed to pay off for the New York City Employees’ Retirement System.
One holdback may be the mid-decade vintage of the venture portfolio. Many mid-decade funds seem to have benefited less from the industry’s recent surge in performance.
Yet the portfolio’s results underscore the importance of picking well in the asset class.
The pension fund holds 21 venture and secondary funds with vintages of 2004 to 2013. Several big name funds are included, such as one from the Psilos Group and another from RRE Ventures, but so are others that are less well known.
The portfolio is weighted toward mid-size, multi-stage funds. It includes three large secondary funds from Landmark Partners and a pair of fund of funds from Fairview Capital Partners.
At the top of the portfolio is Aisling Capital II from 2008, which had a 23.5 percent IRR as of September, according to a recent NYC ERS’ portfolio report. Next in line was Landmark Equity Partners XIV, also of 2008, with an IRR of 17.2 percent.
That was matched almost identically by FTVentures III, with an IRR of 17.1 percent as of September, the report shows.
Yet more than half the portfolio had IRRs in the single digits and four in negative numbers.
The accompanying table lists the 21 funds with their commitments, distributions and IRRs.