Illinois Teachers’ Retirement System Investor Profile

The Illinois Teachers’ Retirement System is a public pension fund founded in 1934. It manages approximately $75.6 billion in assets as of June 30, 2023, and serves as a key provider of retirement, disability, and survivor benefits to certified teachers and administrators in Illinois public schools outside of Chicago. As a pension fund, it oversees assets for over 400,000 members, focusing on long-term financial stability to meet its obligations.

Investment Strategy

The Illinois Teachers’ Retirement System invests in a diversified portfolio with an emphasis on long-term growth and risk management. Its asset allocation includes equities, fixed income, real estate, and private equity. The fund has a significant allocation to alternative investments, which accounts for 25% of its portfolio. It aims to achieve a 7% assumed rate of return on investments to support its pension obligations. Additionally, the system engages in responsible investing practices, incorporating environmental, social, and governance (ESG) factors into its decision-making process to enhance overall portfolio performance and diversification.

Private Markets Approach

The Illinois Teachers’ Retirement System maintains a 25% allocation to alternative investments, which encompasses private equity and real estate. It has made commitments to private markets to improve returns and diversification, including specific investments in funds such as those from Vista Equity Partners and KKR private equity funds. These allocations are part of its broader strategy to manage risk and achieve long-term growth objectives.

How Fund Managers Should Approach

Fund managers seeking allocations from the Illinois Teachers’ Retirement System should align their proposals with the fund’s focus on diversified portfolios, long-term growth, and risk management. Given its emphasis on alternative investments, including private equity, managers should highlight how their funds contribute to the fund’s 25% alternatives allocation and support its responsible investing practices, such as ESG integration. Proposals should demonstrate potential to help achieve the fund’s assumed 7% rate of return and enhance overall diversification, as evidenced by its existing commitments to private markets. Managers should also note the fund’s operation under a board of trustees, ensuring that engagements respect this governance structure.