- The Fairfax County Employee Retirement System plans to focus on previously invested funds.
- Pension funds may refrain from investing in new funds because they expect VC returns to slow.
- Despite the market outlook, it plans to continue investing in blockchain, AI, and life sciences.
Some limited partners are now considering how to manage their cash and allocations, leaving potentially newer, less established venture capital firms behind as financing continues to slide into areas not seen since early 2020.
Andrew Spellar, chief investment officer for Fairfax County, Virginia’s employee retirement system, said the market remains optimistic but will be more cautious about where to put the cash.
“If you have a business, you’re going to use your current money and use less of your new money,” Spellar said. “We want to be less exposed to risky assets and we will double that for areas where we feel safer.”
Spellar said the fund’s earnings report was “completely positive” from the first quarter, but expects a report expected in June to tell a different story. Spellar said in the next report that there could be some losses, which will affect how they invest in the short term.
The layoffs and plunge in stock prices have prompted many to start preparing for a massive withdrawal of investments in the tech sector.
However, according to Spellar, the potential losses from open market and private investments have not hurt the fund so far, as pension funds have been able to protect themselves from much of the decline by investing heavily in real assets such as commodities.
Spellar said the fund has seen strong growth, especially in innovation themes or funds that invest in artificial intelligence, life sciences, cybersecurity and blockchain.
While pension funds still expect these areas to grow, they may not be investing more any time soon.
“We do not expect new assignments on this subject at this time as we have very good assignments on that subject,” he said. “Last year we made good returns on blockchain, and even life sciences.”
Fairfax County has been investing in technologies such as blockchain since 2018. promised $10 million. To the Morgan Creek Blockchain Opportunities Fund. Spellar has since said he has invested in a fund run by venture capital firm Blockchain Capital and Polychain. The county said its investments in blockchain are primarily focused on blockchain technology companies, with no more than 15% spent on tokens and cryptocurrencies.
As part of its commitment to blockchain and crypto, Fairfax County plans to seek board approval to invest in a fund using a yield farming strategy. As reported by Bloomberg, the Fairfax County Employee Retirement System and the Fairfax County Police Retirement System want to invest in two funds with a return of at least 9%. Bloomberg said both pension funds have invested at least $50 million in Parataxis Capital Management. An investment firm focused on digital tokens and cryptocurrencies.
Of course, Spella said that it all depends on the performance of the cryptocurrency market. Cryptocurrency prices have plummeted recently, with one of the most overhyped cryptocurrencies, Luna, and the stablecoin, TerraUSD plunging.lost nearly 90% of its value.