Key Takeaways
- • The City of Austin Employees' Retirement System (COAERS), a $4.2 billion public pension, approved a new strategic asset allocation in 2025 targeting 10% to private credit, 15% to real assets, and 8% to private equity, marking its formal entry into structured private markets investing.
- • Chief Investment Officer David Kushner, who joined COAERS in 2022, built the pension's private markets infrastructure from zero, presenting the fund's first private equity recommendation to the board in late June 2026 after four years of foundational work.
- • COAERS hired Albourne as its first private markets investment consultant in July 2025 and is actively evaluating managers across private credit, private equity, real estate, and infrastructure with public market proxies (stocks, REITs, bank loans) currently funding capital calls.
- • The fund's late entry into private markets—despite having only two legacy open-end core funds in real estate and infrastructure—positions it advantageously as it scales allocations with no encumbered legacy portfolio constraining deployment strategy.
Summary
The City of Austin Employees' Retirement System has completed a multi-year buildout of its private markets program and is now positioned to deploy capital across alternative asset classes at a potentially advantageous market juncture. The $4.2 billion pension, historically absent from structured private markets, approved a new strategic asset allocation in 2025 designating 10% to private credit, 15% to real assets, and 8% to private equity. This marks a formal commitment to alternatives after CIO David Kushner, who joined the fund in 2022, constructed the foundational infrastructure required for institutional-grade private markets investing.
Kushner's four-year timeline to present the first private equity recommendation reflects the operational complexity of launching a modern alternatives program from a nascent state. COAERS inherited minimal legacy private markets exposure—only two open-end core funds in real estate and infrastructure—allowing the fund to design its allocation strategy without legacy constraints. The fund secured Albourne as its first private markets consultant in July 2025, signaling the formal transition from planning to active manager evaluation and deployment.
The fund's approach to capital deployment demonstrates sophisticated interim portfolio management. With no existing private markets portfolio, COAERS currently uses public market proxies across its four target verticals: equity positions replicate private equity exposure, REITs substitute for real estate, and bank loan holdings (tracked against the LSTA index) proxy for private credit. This structure provides "beta exposure" across asset classes while generating liquidity to meet capital calls as private commitments are funded. As private investments are approved and capital is drawn, allocations will systematically shift from public market proxies into the new private mandates.
The timing of COAERS' market entry reflects deliberate institutional strategy rather than reactionary positioning. By constructing its program during a period of private markets maturation, the fund benefits from established infrastructure, proven manager ecosystems, and operational frameworks refined across the industry. With consulting support in place and active manager evaluation underway, COAERS is now prepared to execute what Kushner characterized as a "state-of-the-art program" with appropriate governance, staffing, and operational capacity to manage complex, illiquid alternative investments at scale.
Kushner's four-year timeline to present the first private equity recommendation reflects the operational complexity of launching a modern alternatives program from a nascent state. COAERS inherited minimal legacy private markets exposure—only two open-end core funds in real estate and infrastructure—allowing the fund to design its allocation strategy without legacy constraints. The fund secured Albourne as its first private markets consultant in July 2025, signaling the formal transition from planning to active manager evaluation and deployment.
The fund's approach to capital deployment demonstrates sophisticated interim portfolio management. With no existing private markets portfolio, COAERS currently uses public market proxies across its four target verticals: equity positions replicate private equity exposure, REITs substitute for real estate, and bank loan holdings (tracked against the LSTA index) proxy for private credit. This structure provides "beta exposure" across asset classes while generating liquidity to meet capital calls as private commitments are funded. As private investments are approved and capital is drawn, allocations will systematically shift from public market proxies into the new private mandates.
The timing of COAERS' market entry reflects deliberate institutional strategy rather than reactionary positioning. By constructing its program during a period of private markets maturation, the fund benefits from established infrastructure, proven manager ecosystems, and operational frameworks refined across the industry. With consulting support in place and active manager evaluation underway, COAERS is now prepared to execute what Kushner characterized as a "state-of-the-art program" with appropriate governance, staffing, and operational capacity to manage complex, illiquid alternative investments at scale.
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.