Pensions & Investments: Private equity’s contribution to strengthening a pension fund

By: Christopher E. Gonzales

The strong performance of our private equity portfolio is helping us to strengthen the retirement security of our members and lower the cost to taxpayers and the city. That’s a winning formula for everyone.

Our members are firefighters who stand ready and willing to risk their lives to save yours and mine. My job at the Houston Firefighters’ Relief & Retirement Fund is to make sure that these brave men and women get the financial security they deserve when they decide to retire. Our investment returns are critical. They help to strengthen and safeguard the retirements of our fund’s 6,600 active and retired members.

Our 10-member board is composed of five active firefighters, one retired firefighter and two citizen members, along with the city treasurer designee and a representative of the mayor.

Together, our goal is simple: make the smartest investment decisions we can to maximize returns, control risk and meet our obligations to our members. Private equity investment is one critical tool we use to fulfill this mission.

For the second year in a row, the Houston Firefighters’ Relief & Retirement Fund was among the top ranked in the Private Equity Growth Capital Council’s top 10 pension funds by private equity returns.

HFRRF earned a fourth-place spot in the private equity return ranking with a 13.6% annualized return, net of fees, over the 10 years and 9.3% over the five years, ended June 30, 2012.

Returns have shown consistency. In the 10 years ended June 20, 2011, the PEGCC study ranked HFRRF seventh best in private equity portfolio performance.

The PEGCC’s report showed that private equity returns to large public funds outperformed all other asset classes with median annualized 10-year returns of 10% for the subset of 146 large public pension funds that published 10-year returns ended June 30, 2012.

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