Pennsylvania Public School Employees tweaks its asset allocation

Pennsylvania Public School Employees' Retirement System, Harrisburg, slightly increased target allocations to global equities, private real estate and master limited partnerships, and decreased targets to high-yield and absolute-return strategies, confirmed spokeswoman Evelyn Tatkovski.

The $49 billion pension fund increased its target to global public equities to 19% from 17%; private real estate, to 13% from 12%; and MLPs, to 3% from 2%. The increase to global equities was because of its attractive return profile, according to an e-mail from Ms. Tatkovski, while the target for private real estate was increased to reflect actual allocation and projected cash flows. The boost to MLPs was due to an attractive risk/return profile, she said.

The targets for absolute-return strategies dropped to 10% from 12% and high yield dropped to 6% from 8%. The target to absolute-return investments was decreased because of a low-return environment, and the decrease in the high-yield target was due to compression in yield spreads resulting in lower return opportunities in liquid high yield, Ms. Tatkovski wrote.

Also, the target for commodities remains unchanged at 6%, although it now will be split between diversified commodities, at 4% of the total fund, and gold at 2%. The change reflects the dedicated allocation to gold that the pension fund put in place in 2012.

Ms. Tatkovski wrote in the e-mail that the changes likely will be funded through shifts in allocations among existing managers, with no terminations or new hires anticipated.

Wilshire Associates assisted.