University of Kentucky claws back public, hedged equity in new asset allocation

Private equity, diversifying strategies increased; CIO expects manager changes

University of Kentucky, Lexington, made changes to the target asset allocation of its $1.2 billion endowment, said Todd Shupp, chief investment officer.

The new targets, approved by the university's investment committee in December, are 20% each public equity and diversifying strategies; 15% private equity; 10% each public real assets, private real assets and high-quality/rate-sensitive strategies; and 5% each hedged equity, public credit and private credit.

The previous targets were 24% public equity, 18% diversifying strategies, 14% hedged equity, 12% each private equity and public real assets, and 10% each high-quality/rate-sensitive strategies and private real assets.

The target changes were made to improve the portfolio's diversification and risk-return profile, and manager changes are expected, Mr. Shupp wrote. He did not provide specifics.

The endowment was previously invested in credit but did not have formal policy targets. Diversifying strategies include areas such as multistrategy, event-driven, relative-value and global macro hedge funds, and global tactical asset allocation strategies.