Investment Strategy
The SIC strives to preserve and grow its permanent funds, so that future generations can enjoy the same or greater benefits than those who benefit today.
Investment Overview
The SIC's goals dictate our investment strategy, as well as the level of risk we take in trying to achieve those goals. Our current annual investment return target is 7% for the Land Grant Permanent Fund and 6.75% for the Severance Tax Permanent Fund.
The Council believes these returns can be achieved over time through a balanced portfolio of diversified investment strategies with different degrees of correlation and risk. Accordingly, the SIC invests primarily in two types of assets: public equity and private equity (in a sense, companies that are publicly owned and companies not publicly owned).
The Council performs an extensive asset allocation study approximately every three years and sets annual investment targets based upon its findings.
Investment Asset Classes
Public Equity Investments
The publicly traded equity portfolio is the cornerstone of the permanent funds and is the largest and most liquid of the SIC's investment assets. Includes U.S. and international stocks, with a focus on capturing market returns through low-cost strategies and skilled active managers.
Private Equity
The Council has been investing in private equity funds since 1989, and currently has over $2.7 billion in these assets with a long-term allocation target of 11%. Includes investments in hundreds of private companies through dozens of managers and more than 100 limited partnerships.
Real Estate
The SIC has been investing in real estate since 2004. The Council targets 12% of the funds' total assets for its real estate sector, which translates to about $2.7 billion. Currently invested in more than 40 commingled funds with investments in more than 2,000 properties.
Real Return Assets
Created in 2011 with a 10% asset allocation target. Includes investments in infrastructure, timber, agriculture, energy, inflation-linked securities, and commodities. Currently, the SIC has approximately $2.2 billion invested in this asset class.
Core Bonds
Fixed income assets strategically used to promote portfolio stability and liquidity. Composed of high quality, highly liquid assets like U.S. treasuries and highly rated corporate securities that provide diversification and downside protection.
New Mexico Private Equity
The SIC may invest in New Mexico-based private equity funds, statutorily authorized to commit up to 11% of the STPF. The Council can consider economic benefits to the state in addition to potential financial returns. Currently has over $400 million in these investments.
New Mexico Companies
Thanks to the SIC's slow-and-steady philosophy, its sure-handed guidance, and its commitment to New Mexico's venture investment ecosystem, the state's private equity programs have been able to do quite well.
Between 2014 and 2019, the SIC signed off on $82 million for seven out-of-state venture funds (which have since invested in New Mexico startups). Similarly, the Council has sent $105 million to the Catalyst Fund since 2016, which has invested in six new micro funds throughout the state.
As of 2019, venture investment in 29 New Mexico companies totaled $302 million. Some notable companies supported by the SIC include BayoTech (hydrogen fuel cells), RiskSense (cybersecurity), Skorpios Technologies (semiconductors), Descartes Labs (data analytics), and Meow Wolf (immersive art experiences).
The Council has been investing in private equity funds since 1989, with a long-term allocation target of 11% of total assets.
The Council targets 12% of the funds' total assets for its real estate sector, currently invested in more than 2,000 properties worldwide.
Investments in infrastructure, timber, agriculture, energy, and commodities provide diversification and inflation protection.