Calling it a “first-of-its-kind benchmark,” the firms said the index fills a void for the asset class by providing investors with a transparent, reliable reference point based on the performance of a diversified universe of leading open-ended infrastructure funds, according to a July 16 release.
The index was created through collaboration between Wilshire and GCM Grosvenor, with support from some open-ended infrastructure funds, the release noted.
“Investors, both institutional and retail, are looking for ways to access private markets,” said Mark Makepeace, the chief executive officer of Wilshire Indexes, in an interview.
“They want transparency, methodology, certainty around being able to invest in this part of the market. This is a first in terms of private market infrastructure and a first in not just providing transparency… but by teaming up with GCM Grosvenor, we are able to create a fund in which institutional investors can invest and achieve exposure”
GCM Grosvenor, with its $82 billion alternative investments platform, will contribute ongoing private market insights and risk management expertise as the index evolves, the release noted.
To address demand for passive exposure to this universe, GCM Grosvenor is also developing investable vehicles designed to track the index, with anticipated launches in the coming months.
Jon Levin, president of GCM Grosvenor, said with respect to future vehicles that his firm will create, “there’s a lot of optionality in funds that reference the index.”
One of the challenges that private infrastructure investors have had is lacking a good benchmark or index to monitor performance, he said.
“The real key and foundational innovation here is in creating the index,” he added. “From there you can build a lot of different products that, over time, reference the index. Naturally the first step is something that attempts to track the index.”
Makepeace said that demand for private assets is growing from both retail and institutional investors. Makepeace noted that the $558.2 billion California Public Employees’ Retirement System, Sacramento, the largest public pension fund in the U.S., just hiked its target allocation to private equity to17% from 13%. (Private assets now account for nearly 18% of its portfolio).
North Dakota Trust Lands, a longstanding collaborator with both Wilshire Indexes and GCM Grosvenor, played an instrumental role in forging the partnership behind the index and anticipated investor-focused product.
“Allocators like us have long searched for a volatility-matched, risk-appropriate, and investable infrastructure benchmark, and we believe that Wilshire Indexes and GCM Grosvenor have the best expertise to help bring this vision to life,” said Frank Mihail, chief investment officer of North Dakota Trust Lands, in the release.
Makepeace said North Dakota Trust Lands has been a leading institutional investor in advocating for investment in private infrastructure.
“They’d been pushing for these things -- access to these markets, and were quite vocal in helping us with their expertise in creating the right index and making sure we’re meeting the needs on transparency and access.” he said. “They’ve also been one of the seed investors in funds GCM Grosvenor creates.”
The North Dakota Trust Lands manages 2.6 million mineral acres, 700,000surface acres and 13 permanent education trusts, including the Common Schools Trust Fund currently valued at over $7.5 billion.
Following the launch of the index, the Wilshire Indexes and GCM Grosvenor plan to collaborate on additional alternative investment indexes and complementary investable products across the alternative investments landscape.
