SWIB

“First of all, I think SWIB is a best-in-class public pension on a number of fronts here in the United States, and I think even globally.”

“We're doing more in MEZ, more in distressed, and a lot of the distressed people that we're working with, we're giving them trigger funds, so that we'll give you a certain amount of money today, and if there's a real proper distress cycle, we'll give you more, …”

“We actually are pretty big believers in lower mid-market funds, but we think that the opportunities in lower mid-market, if you've got the skill to really go in and assess people, we think the opportunities for returns are better.”

“About eight of the 10 that we started with actually have been running money for a little while on their own, so we can look at their track records.”

“So we do have about 20 to 25% of our portfolio in passive, mostly because we want to do all of our rebalancing in passive space. So we're also very rigorous about rebalancing each month, and we want to be able to do that without hitting our active managers all…”

“We have on occasion done day one, but we will often do year one investments, and we are willing to work with managers on what they're looking to achieve from a business perspective and what we are looking for as well.”

“We do a little bit less risk in terms of the assets that we own, and then we add back a little bit of risk through levering the entire plan.”

“Particularly last year with the magnificent seven and the stock market being so dominated by seven companies, it's been hard to be active because so much of your allocation gets eaten up by just even having a market weight in those seven. So what we find by lo…”

“So our portfolio is relatively smaller. It's about two billion dollars.”

“Particularly in venture where we will do, we prefer not to, but we will do five or ten million dollar checks to get A toehold with somebody and then try and grow it over time.”

“One is we have a Wisconsin venture portfolio. So we have a portfolio that Is designed to either invest in managers that are based in Wisconsin or ones that spend a lot of time with Wisconsin companies. Now, unfortunately, I don't have a lower return hurdle for…”

“So we recently helped a group get a secondary strategy up and running, and in exchange got really interesting economics out of that.”

“So we have delegated authority, which is great because it means we can move fast. We can speak for investments. We don't have to say, well, we'd like to invest, but talk to us in a month after we've talked to our investment committee and we'll let you know. So…”

“What we don't do is try to take out the betas underneath. Partly we haven't done it because operationally it's difficult, and then partly because if a manager tells us at the end of the month or even the end of the week that they're along something, by the tim…”

“We're actually growing our privates allocation at the moment, and we're happy to Do that.”

“So we had some managers where we had made an initial allocation and we went back to them and said, OK, you're having trouble getting to your final close. What if we give you another twenty five million that'll get you Close enough. And in exchange for us givin…”

“What we do look, though, is over time, does anybody have a bias? And if they tend to have a beta bias, then they're probably a candidate to leave our portfolio.”

“I don't think there's any strategy that we don't do other than long biased. So we do have long short equity hedge funds. We do have macro funds. We have quant funds. We have multi strats. We have some relative value. And then we also do a little bit of special…”

“And in fact, other states would love to set up a similar system, but there's just not enough trust between the pension participants, the taxpayers, and the investment professionals to set that up.”

“Another thing that we've done is we partnered with one of our multi pad hedge funds. They basically spun out their technology and created a separately managed account platform. So us and UTIMCO together basically anchored this new manager, and as a result of t…”

“All of our emerging markets we do externally.”

“So our default position is to do things internally, but then there are three reasons that lead us to do things externally, and they're pretty reasonable, such that the portfolio ends up being about half internal, half external.”

“We're currently at about 12% leverage, so we have 112% invested for every dollar that we have in assets, and that used to be higher when the yield curve was not inverted. It makes much more sense to do this when the yield curve is more normal, so we used to ha…”

“Our internal teams don't see what the positions that our external managers have, so let me be clear about that. There is a Chinese wall there.”

“So we have a very distinct way that we use them, which is portable alpha. So we do not actually, and you'll notice when I gave you the allocation, there were no hedge funds in there. It's because we actually think of the hedge funds as almost an overlay. So we…”

“When we're shown, for instance, a co-investment, we can respond within a couple weeks.”

“Part of the reason that we did a separately managed account platform now and not in the past is we feel like now that there's not negative selection bias on the talent. So what we're finding is there's a lot of folks who are high quality managers often worked …”

“But we're about 38% in equities, 26 in fixed income, 19% in tips, 30%, give or take, in privates. So that's 10 in private real estate and 20 in private equity and private debt. And that gets you to about a 112.”

“The real unlock when you think of an overall plan like UTIMCO or SWIB, you're implicitly borrowing money at Fed funds plus like 20 basis points.”

“Here at the state of Wisconsin, we run about half of our assets internally and then half of our assets externally.”

“I'm the biggest consumer of the fleet rate at SWIB right now, and I borrow a 10, eleven billion dollars.”

“Our typical write-up is about 40 pages plus and probably takes us Three months to get a deal done in our main hedge fund portfolio. Here, if we find somebody we really like, we could probably get three, four weeks, a 10 to 15 page write-up, and it's much more …”

“And in 99.9% of the cases, the PM doesn't want to do anything special. They want everyone to be on the same terms and the same strategy.”

“We came up with this heuristic, so we have 17 PMs, and we're managing like it's a portfolio, but if we get confidence in that manager enough, they can graduate and become their own line item in our hedge fund portfolio. As we get more and more confidence, we c…”