When David Kushner joined the City of Austin Employees' Retirement System as chief investment officer in 2022, he inherited a pension with no private markets program—only two open-end core funds in real estate and infrastructure. Four years later, the $4.2 billion public fund has presented its first private equity manager recommendation to trustees, capping a deliberate ground-up build that prioritised infrastructure over speed. Kushner, a finalist for public pension CIO of the year, told Institutional Investor that assembling the necessary pieces took longer than a simple allocation shift. The delay reflected the complexity of launching a state-of-the-art programme from scratch, he said.

Last year the board approved a new strategic asset allocation: 10 percent to private credit, 15 percent to real assets, and 8 percent to private equity. The fund also hired Albourne as its first private markets investment consultant in July, tasked with pacing and strategy across the nascent portfolio. Kushner's team—four senior staff, a recently hired analyst, and a private equity director starting in July—is now actively evaluating managers across private credit, private equity, real estate, and infrastructure. The late-June board meeting marked the first time trustees reviewed a formal private equity recommendation, a milestone Kushner had spent the prior years working toward.

Because COAERS is starting with no legacy portfolio, it currently uses public market investments as proxies for its four verticals: stocks in place of private equity, REITs in place of real estate, and bank loans in place of private credit. The fund hired a bank loan manager to track the LSTA index, giving it beta exposure across all asset classes while the private programme scales. As more private investments are approved and capital is called, money will be shifted out of those public holdings and into the new mandates, Kushner explained. The proxy structure serves as both placeholder and funding source, allowing the pension to maintain target exposure without forcing capital into illiquid vehicles before due diligence is complete.

Kushner came out of retirement to take the Austin role, bringing a system he had established at the Florida State Board of Administration called core equity, designed to outperform the S&P 500 without adding risk. He later refined the process at the Los Angeles and San Francisco employees' retirement systems. Austin represents the fifth time in his career he has been handed a blank sheet of paper to build something from scratch, he said. But this iteration required more than portfolio design: Kushner had to secure legislative support, hire staff, and onboard a consultant before the first deal could reach the board.

In 2023 the City of Austin and COAERS reached a legislative agreement that improved cash flow and gave the pension fund the flexibility to invest in private markets. That same year the fund made its first private investment, a direct lending deal with Blue Owl. Once the legislation passed, the pension had better cash flow from the city, which allowed it to commit to more illiquid assets. Kushner noted that staffing followed legislative certainty: the team now runs lean by design, and the board understands the full build-out will take roughly five years.

Scale gives Kushner's team unusual flexibility. Because the fund is smaller than many institutional peers, it can write $10 million to $20 million checks that larger funds cannot accommodate. Kushner described the ability to pick the best opportunities regardless of manager size as a structural advantage, calling the constraint facing mega-funds a scale issue. The board has signalled patience, prioritising quality over speed as the private allocation ramps. Kushner said the focus remains on finding the best managers to build the programme, rather than hitting interim targets for the sake of deployment.

The deliberate pace reflects both operational necessity and strategic caution. Kushner told Institutional Investor it took four years to get the first private equity recommendation to the board because the fund had a lot of pieces to put in place to build a state-of-the-art program, including consulting and staff. The long runway between hiring and deal-making may insulate COAERS from some of the vintage-year risk that has tripped up peers who moved faster into private markets during frothier periods. Whether the beta-proxy model holds up during the transition, and whether trustees remain patient as deployment lags peers, will determine if the late start proves prescient or merely cautious.

Kushner's approach stands in contrast to funds that rushed into alternatives with legacy managers and pacing schedules inherited from earlier regimes. By starting fresh, COAERS avoids the portfolio drag of underperforming legacy commitments, but it also forgoes years of vintage diversification and the compounding benefits of early entry. The trade-off is explicit: slower deployment in exchange for cleaner governance, better manager selection, and the optionality to wait for compelling opportunities. As the first private equity recommendation moves through the approval process, the proof will arrive in performance—and in whether the four-year foundation justifies the delay.