Vermont pension committee to hike allocations to commodities, real estate, risk parity
By Rob Kozlowski | February 27, 2013 4:06 pm
Vermont Pension Investment Committee, Montpelier, will increase its target allocations to commodities, real estate and risk parity for the $3.7 billion Vermont State Retirement Systems as a result of an annual asset-allocation review, wrote Stephen Rauh, chairman of the investment committee, in an e-mail.
The target for commodities will be increased to 4% from 2%. The committee will add about $73 million to Schroder Investment Management, which currently manages commodities for the pension fund, giving it a total of about $146 million.
Funding for the increase in commodities will come from a reduction in the pension fund's allocation to high-yield debt, to 4% from 6%. Post Advisory Group, which is currently under watch, manages about $184 million in high yield for the pension fund; that amount will be reduced to about $111 million.
The real estate target will be increased to 6% from 4.5% and will be funded by a reduction in the target for equities. Mr. Rauh wrote that specifics regarding the funding will be discussed at the committee's March 26 meeting. The pension fund's overall target for equities is currently 31.5%.
The committee also approved increasing its target for risk parity to 10% from 8%, to be funded by a reduction in the fixed-income target allocation, the specifics of which will be discussed at a future meeting, Mr. Rauh wrote.
Investment consultant NEPC assisted.