INVESTING/PORTFOLIO STRATEGIES

Merced County axes high-yield allocation, names new retirement plan administrator

Merced County (Calif.) Employees’ Retirement Association is removing its 5% target allocation to high yield as a result of an asset-liability study, said Angelo Lamas, retirement officer, in an e-mail.

The $633 million pension fund’s target to high yield previously fell within the pension fund’s overall 22.5% target to fixed income, which is being reduced slightly to 22%. Domestic core fixed income is being increased to 17% from 14.5% and bank loans to 5% from 3%. AXA Investment Managers currently runs a $36 million high-yield portfolio.

Mr. Lamas said the transition plan to the new allocation hasn’t been set and no manager hires or terminations have been determined yet.

The overall domestic equity target will remain unchanged at 59%, but there are changes to subasset classes within that target. Private equity goes up to 9% of the overall fund from 7% and emerging markets equities to 7% from 6.1%. Domestic large-cap equities are being reduced to 22% of the overall fund from 22.7%, domestic small-cap equities to 5% from 5.7%, and international equities to 16% from 17.5%.

The overall alternatives target is going up to 19% from 18.5%. Absolute return increases to 5% from 4.5% of the overall fund, while real estate, natural resources and infrastructure remain unchanged at 8%, 3% and 3%, respectively.

Investment consultant Verus Advisory assisted.

Separately, Kristen Santos was named the pension fund’s retirement plan administrator. Previously the Alliance Worknet director in Stanislaus County, Ms. Santos is tentatively scheduled to begin Oct. 3, Mr. Lamas said. She replaces Steven Bland, who left the pension fund in 2015. His plans were unknown.