The Employees Retirement System of Texas (ERS) provides retirement, health, and death benefits to state employees, elected officials, and law enforcement officers in Texas. With approximately $35 billion in assets under management, ERS serves over 250,000 active and retired members.
Investment Strategy
ERS maintains a diversified portfolio structured to meet its long-term return objectives while controlling downside risk. The asset allocation includes domestic and international equities, fixed income, private equity, real assets, hedge funds, and cash. The fund’s investment team, based in Austin, manages a significant portion of the public markets portfolio internally while relying on external managers for alternatives.
Private equity is the largest component of the alternatives portfolio, with commitments spanning buyout, growth equity, and venture capital across multiple geographies and vintage years. Real assets include real estate and infrastructure investments, which provide inflation protection and stable cash flows. The hedge fund allocation is designed to provide absolute returns with lower correlation to public equities.
ERS conducts regular asset-liability studies to inform its strategic allocation targets. The Board of Trustees approves allocation ranges, and the investment team has discretion to operate within those bands based on market conditions and opportunity.
How to Approach
Fund managers interested in working with ERS Texas should contact the alternatives investment team directly or through investment consultants who advise the system. ERS values managers with proven, repeatable processes and strong risk management frameworks. The system prioritizes alignment of interest through meaningful GP commitments and reasonable fee structures. Initial outreach should include a brief fund overview, track record summary, and explanation of what differentiates the strategy from peers.
Frequently Asked Questions
What is ERS Texas's alternatives allocation?
ERS Texas allocates approximately 18% of its total portfolio to alternative investments, spanning private equity, real assets, and hedge funds. The system has been steadily increasing its alternatives exposure over recent years to enhance return potential and diversify away from public market risk.
How large are typical ERS fund commitments?
ERS Texas typically commits between $50 million and $150 million per fund, depending on strategy and fund size. The system invests across buyout, growth equity, venture, real estate, and infrastructure funds. Co-investment opportunities are also considered alongside existing manager relationships.
What is the best way to approach ERS Texas as a GP?
GPs should engage through the ERS investment team or through the system's investment consultants. ERS Texas evaluates managers based on track record, team depth, operational infrastructure, and fee reasonableness. The system attends industry conferences and is open to meetings with managers who present a differentiated strategy.
