Los Angeles City Employees’ Retirement System plans to gradually increase its private equity commitment pace over the next few years, including making progress on a long-gestating plan to break into secondaries and co-investments.

For secondaries, consultant Aksia TorreyCove recently recommended a change in strategies based on the disruption of the coronavirus crisis.

The consultant this year had recommended LACERS look into a secondaries sale to unload some of its older assets, as sister title Buyouts reported. The pension’s portfolio has about 200 managers, said Aksia TorreyCove’s David Fann at a 10 November investment committee meeting.

“One of the consequences of having a large portfolio is you end up having a median performer,” Fann said at the meeting. “You essentially have bought the market without emphasising perhaps the best relationships.”

He recommended 50 to 100 managers as a more manageable number.

Now, the consultant is advising commitments to secondaries funds in lieu of a sale, due to the dynamics of the covid-19 disruption, as Buyouts reported, but will keep an eye out for an eventual secondaries sale.

Some board members expressed frustration with LACERS’ lack of action on the secondaries and co-investment market this year. The topic came up again at the November meeting.

“I’m…a little bit disappointed that the framework hasn’t been established,” said board member Elizabeth Lee at the meeting. She repeated her earlier concerns that LACERS had “missed the boat” on the secondaries market during the covid-19 crisis, which Buyouts has previously reported.

Chief investment officer Rodney June agreed that LACERS had likely missed some opportunities and said staff wanted to be sure it had the policy right and had thoroughly educated the board.

“I apologise for the delay on this, but when it comes to these types of programs where it’s higher risk and potentially higher returns, we want to ensure that we get the policy down right, because all of the activity from the program will emanate from that policy,” June said. “Until we have the clarity of what those responsibilities are and how much risk the board is willing to take, it’s hard to do anything.”

June added the policies for both secondaries and co-investments will have to involve a clear “delineation of responsibilities.” He also said secondaries opportunities “come and go” and other opportunities would present themselves.

Both of the other investment committee members, chairman Sung Won Sohn and board member Nilza Serrano, agreed LACERS took too long to make policy adjustments.

Serrano also stressed the importance of allowing the board the chance to weigh in, especially on emerging managers, where she feels the committee needs to be able to ensure that diverse emerging managers get their proper opportunities.

June said the new policy would be put forward to the committee in January. He did not respond to a request for comment for this story.

The 2021 strategic plan was approved by the full LACERS board at its 24 November meeting.

– This is an abbreviated version of a report which originally appeared on sister title Buyouts.