At their November 21, 2024, meeting, the Chicago Teachers’ Pension Fund (CTPF) Board of Trustees approved a revised international equity asset class structure, a private credit portfolio structure, and a $10 million investment with Palladium Fund VI. 

Late in 2023, the Board approved, and Fund Staff conducted an International Equity search to simplify the Fund’s structure by re-aligning EAFE and Emerging Markets mandates into ACWI ex-US strategies. At yesterday’s meeting, the Board revised the finalists, replacing LSV Asset Management with Brandes Investment Partners, maintaining the goal of 48% weight to Core and 20% each to Value and Growth (with the remaining 12% to International Small Cap stocks). 

The Board also approved the Private Credit Portfolio Structure Recommendation. In 2023, private credit was introduced as a new asset class to enhance portfolio diversification and expected returns. A 3% target allocation, approximately $350M-$400M, was set. In August 2023, the Board approved a strategic plan for the private credit program, initiating a search for qualified investment managers, which continued throughout 2024.  

At yesterday’s meeting, the Board approved a portfolio structure with 36% Core (Direct Lending) divided into 16% Large Market and 20% small-mid-market; 31% Specialty Finance, 25% Opportunistic, and 8% Niche/Fund of Funds. Three managers: Jefferies Credit Partners, Oak Hill Advisors, and Turning Rock Partners will manage the Direct Lending mandate. Two managers: CFI Partners2 and Silver Rock will manage the Opportunistic mandate. The Specialty Finance mandate will be managed by 400CM and additional managers may be added to this strategy in the future.  

For fiscal year 2024, the Board approved a $50 million Private Equity pacing plan, which anticipated re-up investment opportunities with incumbent managers. At the November 21, 2024, meeting, the Board approved a $10 million allocation to Palladium Equity Partners Fund VI. Contract negotiations will follow, with an expected first closing before the end of 2024. CTPF has been investing with Palladium Equity Partners since 2004, starting with Fund III, followed by investments in Fund IV (2012 vintage) and Fund V (2017 vintage).