Investment Strategy
The New Mexico Educational Retirement Board manages approximately $15 billion in assets for the benefit of active and retired educational employees across New Mexico, including teachers, administrators, and other school district and higher education personnel. NMERB is one of the state’s largest institutional investors and plays a critical role in ensuring the long-term funded status of retirement benefits for New Mexico’s education workforce.
NMERB’s investment strategy is built around a diversified asset allocation designed to achieve long-term returns that exceed actuarial assumptions while managing downside risk. The portfolio is spread across global public equities, fixed income, real assets, private equity, and absolute return strategies. The board reviews and updates its strategic asset allocation periodically based on capital market assumptions and funded status projections.
The board’s investment beliefs emphasize diversification, cost efficiency, and the importance of maintaining adequate liquidity to meet benefit payment obligations. NMERB publishes annual financial reports and quarterly performance updates that detail its asset allocation, investment performance, and manager relationships.
Private Markets Approach
NMERB’s private equity program represents a meaningful component of the overall portfolio, with commitments across buyout, growth equity, venture capital, and distressed strategies. The board has built a diversified portfolio of GP relationships spanning large-cap managers and mid-market specialists, with an emphasis on consistent performance and alignment of interests.
Typical fund commitments range from $25 million to $100 million, with the system occasionally making larger commitments to established managers with strong track records. NMERB has historically invested through commingled funds but has also explored co-investment and secondary market opportunities as ways to enhance returns and manage the overall fee burden of the private equity portfolio.
Real estate investments include allocations to core, value-add, and opportunistic strategies through commingled funds and separate account mandates. The system targets diversified exposure across property types and geographies within the United States. Absolute return strategies, including hedge funds and multi-strategy vehicles, are used as portfolio diversifiers with lower correlation to traditional equity and fixed income markets.
NMERB works with external investment consultants to evaluate new GP relationships and monitor existing commitments. The board’s investment committee reviews proposed commitments and provides oversight of the alternatives program. Prospective managers should review NMERB’s publicly available investment policy statement and recent board materials to understand current allocation targets and manager evaluation criteria.
Frequently Asked Questions
How much does NMERB allocate to alternative investments?
NMERB allocates approximately 25% of its total portfolio to alternative investments, including private equity, real estate, absolute return strategies, and private credit. The private equity program alone represents roughly 10-12% of total assets. The board has maintained a diversified alternatives portfolio to enhance returns and reduce correlation with public markets.
Who oversees NMERB's investment decisions?
The NMERB Board of Trustees sets investment policy and strategic asset allocation. The board works with an internal investment staff based in Santa Fe and external investment consultants to implement the portfolio. Board meetings are public, and investment reports and consultant recommendations are available through the NMERB website.
What types of private equity managers does NMERB invest with?
NMERB invests across a range of private equity strategies including buyout, growth equity, venture capital, and distressed. The system commits to both large established managers and mid-market specialists. Typical commitment sizes range from $25 million to $100 million depending on strategy and fund size. NMERB has also participated in co-investment opportunities alongside existing GP relationships.
