Austin Employees’ Retirement System Profile

The Austin Employees’ Retirement System (AERS) is a public pension fund established in 1947. With approximately $3.6 billion in assets under management as of June 30, 2023, AERS serves over 10,000 active and retired members of the City of Austin workforce. As a pension fund, it provides retirement, disability, and death benefits to employees of the City of Austin, Texas. Governed by a board of trustees appointed by the City, AERS manages a diversified investment portfolio to ensure the long-term sustainability of these benefits.

Investment Strategy

AERS invests across a range of asset classes, including equities, fixed income, private equity, and real estate, to achieve its objectives. The fund aims for a long-term annualized return target of approximately 7% and has allocated about 15% to alternative investments to diversify its portfolio. It emphasizes prudent risk management and cost-effective investment strategies, regularly reviewing and adjusting its asset allocation based on actuarial assumptions. This approach helps maintain the fund’s focus on long-term growth and sustainability for its beneficiaries.

Private Markets Approach

AERS has increasingly allocated to alternative investments, with a specific history of commitments to private equity and real estate funds. The fund’s alternatives allocation, at 15%, includes private equity, where it has made commitments to HarbourVest Partners private equity funds. Additionally, AERS has invested in Texas-based real estate and private equity opportunities. These investments reflect the fund’s strategy to diversify its portfolio and pursue growth through established private market avenues.

How Fund Managers Should Approach

Fund managers seeking allocations from AERS should align their proposals with the fund’s emphasis on diversification, prudent risk management, and cost-effective strategies. Given AERS’s history of commitments to private equity and real estate funds, managers should demonstrate how their offerings support the fund’s long-term return targets and actuarial assumptions. Highlighting investments that enhance portfolio diversification, such as those in private equity or real estate, may be particularly relevant for gaining consideration.