The Los Angeles City Employees Retirement System (LACERS) continued to grow its venture portfolio in its fiscal 2019 year, before a consultant proposed a potential pullback in November.
The California pension fund’s portfolio was 3.41 percent venture as of the end of its 2019 fiscal year, according to the organization’s latest comprehensive annual financial report. The venture bucket grew by $116 million, or by a half percent, in the fiscal year ended on June 30, 2019.
During that fiscal year, the pension committed $20 million to Defy Partners II, which closed on $262 million last April, and $35 million to New Enterprise Associates 17, the behemoth fund targeting $3.6 billion to invest across different stages in technology and healthcare.
The pension system also invested $13.75 million into Spark Capital VI, a product driven stage-agnostic vehicle. LACERS also invested in multiple growth funds, including TA XIII and TCV X.
The LACERS venture portfolio is approximately 13 percent of the private equity bucket and houses growth equity commitments, as well.
The pension fund has been steadily growing its allocation to venture over the last five years. The asset class has grown its portfolio size and its portion of the overall fund.
Venture made up 2.06 percent in 2015 compared to 3.41 percent in 2019, which represents a growth of more than $314 million.
At the end of the fiscal year, the pension’s venture portfolio had a one-year return of 20 percent and a 10-year return of 11.2 percent, according to board documents.
The pension made multiple venture commitments after the fiscal year’s end. The fund committed $25 million to Oak HC/FT III, which closed in August on more than $800 million of capital, and $10 million to Sunstone Partners II, a growth equity fund that closed on $475 million in October.
In November, consultant firm TorreyCove recommended that the pension fund decrease its exposure to venture and increase its exposure to buyouts, as originally reported by Buyouts, an affiliate publication of Venture Capital Journal.
The consultant recommended that the pension fund target 5 percent to 10 percent of the private equity bucket which marks a decrease from the current target range of 5 percent to 15 percent.
The proposed recommendations have not been voted on and a date for such vote has not been disclosed.
LACERS was founded in 1937 and currently serves more than 31,500 active and retired members. The fund has more than $18.7 billion assets under management as of the end of the 2019 fiscal year.