Fund performance: Ohio pension sees gains from Top Tier, Essex

The Ohio Public Employees Retirement System’s venture portfolio is an unlikely assortment of secondary funds, funds of funds and mid-sized venture funds that have been shunned by LPs elsewhere. 

The strategy appears to be paying off. Gains from several Top Tier Capital Partners and Essex Woodlands Health Ventures funds helped lift performance early this year. A pair of Industry Ventures funds also continues to perform well, as does JMI Equity Fund V, which leads the portfolio.

OPERS’ venture portfolio includes 21 funds with vintages of 2003 to 2013. Last year it added Top Tier Venture Capital VI, Industry Ventures Secondary VII and Industry Ventures Special Opportunity Fund II-B, committing $350 million, according to a portfolio performance report updating results to March 2014. 

The portfolio’s performance is generally good. Twice as many funds have positive IRRs than negative ones, and 14 of the 21 funds saw performance gains in the nine months leading to March. What’s interesting is the portfolio included only one fund above $900 million in size and 15 mid-sized funds of $250 million to $900 million.

The biggest gains came from Top Tier funds of funds. The 2010 vintage Top Tier Investments V B saw its IRR improve to 20.4 percent in March from 12.2 percent in June 2013, according to the report. The IRR of 2007 vintage Top Tier Investments IV climbed to 14.6 percent from 8.8 percent. Both smart gains.

Two Essex Woodlands funds improved nicely as well. The 2008 vintage Essex Woodlands Health Ventures Fund VIII saw its IRR rise to 10.8 from 5.7 percent in June. Essex Woodlands Health Ventures Fund VII improved to an IRR 5.9 percent.

The best performing fund in the portfolio, vintage 2005 JMI Equity Fund V, has a commanding lead over the rest of the batch with an IRR of 39 percent.

The accompanying table lists all 21 funds with commitment levels, distributions and IRRs from March 2014 and June 2013.