Florida Senate OKs boost in alternatives
By Barry B. Burr | March 8, 2012 4:01 pm
The $155.4 billion Florida State Board of Administration, Tallahassee, could double its allocation to alternative investments to 20% under a bill awaiting Gov. Rick Scott's signature.
The bill was passed by the Florida Senate on Wednesday; the state House passed the bill Feb. 29.
Mr. Scott, who is one of the FSBA's three trustees, hasn't received the bill yet and hasn't yet decided what action he will take, said Lane Wright, press secretary. If it becomes law, the change would be effective July 1.
John Kuczwanski, FSBA communications manager, said he couldn't say what Mr. Scott's intention is but said the FSBA's investment policy statement “is something he supported and signed off on in the past.” Trustees directed the FSBA to seek the expanded alternatives allocation authority.
Under the bill, the FSBA can implement the 16% alternative investments allocation it adopted in 2010 for the $126.4 billion Florida Retirement System defined benefit plan as recommended in an asset allocation study by Hewitt EnnisKnupp, an investment consultant to the board.
The FSBA has no timeframe for reaching the 16% allocation and has no plans to go to 20%, Mr. Kuczwanski said. Under that allocation, the targets are 11% in hedge funds and opportunistic investments, and 5% in private equity.
Mr. Kuczwanski said he didn't know if discussion of implementation, including searches, would come at the FSBA investment advisory council's March 19 meeting, because its agenda hasn't been set yet.
The FSBA's current actual allocation is 8.7% in alternatives, consisting of 4.7% private equity and 4% in strategic or opportunistic investments, including $1 billion, or 0.8 percentage point, in hedge funds.
With the enactment of the higher alternatives cap, the FSBA would lower its equities and fixed-income holdings.
In addition to the 16% in alternatives, the target allocation would be 52% global equities, 24% fixed income, 7% real estate and 1% cash.
Its current target allocation, in addition to the 10% in alternatives, is 56% global equity, 26% fixed income, 7% real estate and 1% cash.
The Florida Legislature last changed the statutory cap on the alternative investment in 2008, raising it to 10% from 5%.