Michigan Municipal Employees' Retirement System

Investment Strategy

The Municipal Employees’ Retirement System of Michigan manages approximately $10 billion in retirement assets for employees of local governments across the state. MERS serves over 900 participating employers, including municipalities, counties, libraries, and other public entities, making it one of the largest municipal retirement systems in the United States.

MERS’ investment approach is built around a long-term strategic asset allocation designed to meet actuarial return targets and support the funded status of the system’s defined benefit obligations. The portfolio is diversified across global public equities, fixed income, real estate, private equity, infrastructure, and other alternative strategies. The investment philosophy emphasizes broad diversification, disciplined rebalancing, and cost-effective implementation across both public and private markets.

The Retirement Board reviews the strategic asset allocation periodically based on updated capital market assumptions, liability projections, and risk analysis. MERS has adopted a total portfolio approach that considers the interplay between asset classes and the system’s specific liability characteristics. The system publishes annual comprehensive financial reports and regular investment performance updates.

Private Markets Approach

MERS’ alternatives program represents approximately 20% of the total portfolio and includes allocations to private equity, real estate, and infrastructure. The private equity program invests across buyout, growth equity, venture capital, and diversified strategies through commingled fund commitments, with typical commitment sizes in the $50-150 million range.

The system has built a diversified portfolio of GP relationships over time, investing with both large established managers and mid-market firms. MERS evaluates new fund opportunities based on strategy differentiation, team quality and stability, track record consistency, and fee structure alignment. The investment team conducts due diligence in conjunction with external investment consultants before presenting recommendations to the board.

Real estate investments provide exposure to a diversified mix of property types and geographies through both commingled funds and separate account mandates. The program targets a blend of core income-producing properties and higher-returning value-add and opportunistic strategies. Infrastructure allocations focus on essential assets in transportation, energy, utilities, and communications that offer stable cash flows and inflation protection.

MERS has also explored co-investment and secondary market opportunities as ways to enhance returns and manage overall portfolio costs. The system’s $10 billion asset base positions it as a meaningful institutional investor capable of making commitments that are significant to mid-market and upper mid-market fund managers.

Prospective GPs should review MERS’ publicly available investment policy and annual reports to understand current allocation priorities. The system’s focus on local government retirement obligations drives a long-term investment orientation that aligns well with illiquid private market strategies.