North Dakota State Investment Board sets new asset allocation for Legacy Fund

North Dakota State Investment Board, Bismarck, approved a new asset allocation for the $1 billion North Dakota Legacy Fund, an endowment fund for oil and gas tax revenue created in 2010, confirmed Darren Schulz, interim CIO.

The fund is currently entirely managed in short-term fixed-income investments by J.P. Morgan Asset Management (JPM) and Babson Capital Management. Mr. Schulz said that was not a “viable long-term strategy.”

The new asset allocation is 35% global fixed income, 30% domestic equity, 20% international equity, 10% diversified fixed income and 5% real estate.

Mr. Schulz said there could be some searches in the future as a result of the new allocation. The investment office is working with investment consultant Callan Associates on an implementation timetable, which should be ready in four to six weeks, Mr. Schulz said. There is also the potential for using existing managers in the insurance trust, he added. The State Investment Board oversees $3.8 billion in pension assets and $3.2 billion in an insurance pool, which includes the Legacy Fund.

R.V. Kuhns & Associates was hired to perform the one-time asset allocation study. Mr. Schulz said a large reason why R.V. Kuhns was used over Callan was because of its experience with permanent funds in Wyoming and New Mexico.

Separately, the board hired Korn/Ferry International as executive search firm to conduct a search for a new executive director/chief investment officer of the retirement and investment office, confirmed Darren Schulz, interim CIO.

An RFP was issued in March. Mr. Schulz, deputy CIO, was named interim CIO following the retirement of John Geissinger last May. Fay Kopp, deputy executive director and retirement officer, is serving as interim executive director.

The retirement and investment office coordinates the activities of the $7 billion State Investment Board.