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Public Pensions, Private Equity: ATRS and APERS Exceed Targets with Diverse InvestmentsLock Icon

5 min read

The Arkansas Teacher Retirement System has money in stocks and bonds, of course, but also in office buildings, timberland, farms and wood pellets.

It even put a little of its $20.3 billion fund into a project to turn natural gas into liquid fuels in Jefferson County.

ATRS gained more than a billion dollars in value in fiscal 2023, and its strong and diverse performance over the past few years helped persuade the Arkansas Public Employees Retirement System to borrow a strategy and dive into private equity investing.

APERS ended fiscal 2023 with total funds of $10.7 billion.


Both systems, the state’s largest pension funds, exceeded their goals for returns after a dismal fiscal 2022, and both also have new leaders fresh out of state agencies.

Amy Fecher became executive director of the 100,000-member public employees system 14 months ago after predecessor Duncan Baird departed to join Walmart Inc. Mark White joined the 150,000-member teachers system in July after the resignation of Executive Director Clint Rhoden, who has his own software design business.

Both Fecher and White expect private equity stakes to pay off handsomely in fiscal 2024, which began on July 1.

“In May of this year, the board voted to let us enter into the private equity market, and so we have begun that process,” Fecher said in an interview. “We’re very excited about it. When you look at the teachers system, they’ve been in it for quite some time, and over the last couple of years they’ve had good returns. We’re confident it’s going to be a really good sector for us to get into.”

ATRS has about 12% of its $20 billion in private equity, and that strategy helped the system achieve a 9.2% return in fiscal 2023.

Top 15%

“For the 2023 fiscal year, we were in the top 15% [in return on investment] for similar systems around the country,” White said in an interview. “We did have a loss in fiscal year 2022, but even then we were still in the top quarter of similar systems in the country.”

APERS is looking to put between $500 million and $1 billion of its fund into private equity starting this year. It had an overall return of 8.83% in fiscal 2023, and its 10-year average return is 7.78% a year, in the top 39% of U.S. public pension systems.

“We are using Stephens Inc. as our private equity consultant, HarbourVest for our secondary investments manager, and Neuberger Berman as our primary investments manager,” said Fecher, who was secretary of the Arkansas Department of Shared Services before becoming executive director of the retirement system last year.

Neuberger Berman of New York has $460 billion in assets under management, is privately held and is 100% employee-owned. HarbourVest Partners of Boston is one of the world’s biggest private equity investment managers.

Stephens Inc. of Little Rock needs no local introduction.


ATRS assets declined $1.4 billion in the fiscal year that ended June 30, 2022, but half of that decline was the cost of making retiree pension payments. A typical 401(k) retirement fund with 60% stocks and 40% bonds experienced a 12% loss during the same 12 months.

ATRS’ investment losses amounted to nearly 4%, but the fiscal 2021 gain was a whopping 32%.

The APERS fund declined to $10.56 billion in fiscal 2022, off 10.5%. But it, too, was coming off a blockbuster 2021, when the fund rose 31.5% and was up by $1.5 billion.

“You know, fiscal year ’22 was a bad year for everyone,” Fecher said. “And even including that year, we really have good returns, and I feel like it’s just going to get stronger as we move into the private equity sectors.”

Insulated Retirees

APERS and ATRS are defined benefit systems that insulate retirees from market fluctuations.

“We are also a state-sponsored retirement plan,” she said. “Benefits are computed using a formula that considers factors such as your length of employment and your salary history. The benefits are not conditioned upon a good or a bad investment return.”

APERS paid out nearly $660 million in pension benefits in fiscal 2023. The average monthly benefit the year before was $1,351. The system covers state employees, county employees, some city workers and others, Fecher said.

Asset diversification drives success for both systems, the directors said. APERS has targeted its asset allocations 37% to domestic equity, 24% to international equity, 18% to fixed income, 16% to real assets and 5% to “diversified strategies.”

The new twist, private equity, is expected to make up 5% to 10% of the portfolio.

White cited three factors as compelling in ATRS’ investment success: diversification, a strong focus on asset allocation, and reliance on outside experts “who have a strong track record of managing funds” and generating returns.


21,000 Acres

ATRS puts a little over half of its fund into stocks, 15% into real assets, 15% into fixed-income investments and 12% into private equity. It devotes 5% to what it calls opportunistic alternatives.

“We certainly do have money in the stock market,” he said. “But we also have money in real assets like farmland and office buildings. We have money in private equity and fixed income. We really spread our investments around to increase stability.”

Mark White, executive director of the Arkansas Teacher Retirement System, is an attorney and former deputy director of the Arkansas Department of Human Services.
Mark White, executive director of the Arkansas Teacher Retirement System, is an attorney and former deputy director of the Arkansas Department of Human Services. (Steve Lewis)

White, an attorney, is a former deputy director of the Arkansas Department of Human Services.

“There’s a lot of research that shows that for pension systems, asset allocation is probably the biggest driver of return as opposed to individual investments,” White said. “We work with outside consultants on an ongoing basis to set targets for that allocation to generate the best return.”

ATRS’ general investment consultant is AON Investments in Chicago. “Our private equity consultant is Franklin Park, out of Pennsylvania,” White said.

The teachers system has invested more than $20 million in GTL Americas’ $2.7 billion gas-to-liquid fuel project in Jefferson County, and it has a $260 million stake in Highland Pellets of Pine Bluff, which makes wood pellets as a fuel.

“We own 7,400 acres of farmland in Arkansas and we’re about to add another 800 acres,” White said. “That farmland is worth altogether about $50 million. We also have about 60,000 acres of timber in Arkansas.” Nationwide, ATRS owns nearly 21,000 acres of farmland.

White said his system’s economic impact is underappreciated.

“Last month, our total payroll that we distributed to our retirees and beneficiaries was $115.4 million,” he said. “Over the course of a full year, we will pay out $1.4 billion in retirement benefits. So that’s a big economic impact to the state, especially when you go into smaller counties without a lot of businesses.”

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