Key Takeaways
- • LACERS, the $28.7 billion Los Angeles City Employees' Retirement System, could raise its 2027 private equity commitment pacing to $650 million to $750 million, up from the 2026 plan of $550 million to $660 million, according to Aksia's recommendation at the Nov. 10 investment committee meeting.
- • The pension's private equity allocation stood at 20.2% as of June 30, above its 19% interim target and well above its 16% long-term target, yet Aksia argues pacing must be maintained to preserve vintage-year diversification.
- • Staff is planning a secondary sale in 2027 to reduce private equity exposure, with acting CIO Wilkin Ly saying a secondary adviser will be engaged.
- • Actual 2026 commitments totaled $419 million year-to-date as of Sept. 30 and are likely to fall below the pacing range, as Aksia passed on some prior managers lacking performance efficacy.
- • Pacing requires LACERS board approval at a future meeting.
Summary
The Los Angeles City Employees' Retirement System could increase its private equity pacing plan even though the asset class currently sits above its target, according to a report by Pensions & Investments. Private equity consultant Aksia presented a recommendation at LACERS' Nov. 10 investment committee meeting calling for $650 million to $750 million in commitments during 2027. The proposal would step up from the 2026 pacing plan of $550 million to $660 million, pending approval by the LACERS board at a later meeting. Actual commitments year-to-date as of Sept. 30 totaled $419 million.
The recommendation comes as the portfolio's private equity allocation reached 20.2% as of June 30, above the 19% interim target and well above the 16% long-term target. Aksia said maintaining vintage-year diversification is central to a long-term private equity program, and that sustaining or increasing pacing matters most if the multiyear slowdown in distributions ends. The consultant's presentation states that if distributions significantly increase in 2027 and 2028, LACERS' exposure would fall well below its long-term target. Trevor Jackson, managing director on Aksia's portfolio advisory team, said that underallocation would be difficult to reverse quickly, noting the allocation could fall to around 14% in four to five years under a sharp cutback to $300 million.
At the same time, LACERS is considering a secondary sale in 2027 to reduce current private equity exposure. Wilkin Ly, the pension's acting chief investment officer, said, "We will envision having a secondary adviser help us reduce our exposure to private equity, so that's in the pipeline." Further details were not provided. Aksia's base case assumes distributions remain slow through 2027 and 2028 and assumes 4% long-term growth for the portfolio.
Actual 2027 commitments could again come in below the pacing plan, as occurred in 2026. Jackson said LACERS was highly selective in 2026, passing on some previously used managers because they had not demonstrated performance efficacy. He did not name those managers.
The recommendation comes as the portfolio's private equity allocation reached 20.2% as of June 30, above the 19% interim target and well above the 16% long-term target. Aksia said maintaining vintage-year diversification is central to a long-term private equity program, and that sustaining or increasing pacing matters most if the multiyear slowdown in distributions ends. The consultant's presentation states that if distributions significantly increase in 2027 and 2028, LACERS' exposure would fall well below its long-term target. Trevor Jackson, managing director on Aksia's portfolio advisory team, said that underallocation would be difficult to reverse quickly, noting the allocation could fall to around 14% in four to five years under a sharp cutback to $300 million.
At the same time, LACERS is considering a secondary sale in 2027 to reduce current private equity exposure. Wilkin Ly, the pension's acting chief investment officer, said, "We will envision having a secondary adviser help us reduce our exposure to private equity, so that's in the pipeline." Further details were not provided. Aksia's base case assumes distributions remain slow through 2027 and 2028 and assumes 4% long-term growth for the portfolio.
Actual 2027 commitments could again come in below the pacing plan, as occurred in 2026. Jackson said LACERS was highly selective in 2026, passing on some previously used managers because they had not demonstrated performance efficacy. He did not name those managers.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.