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Wyoming board revamps permanent funds’ asset allocations, ups internal capabilities

Wyoming State Loan and Investment Board, Cheyenne, overhauled the target allocations in the nine funds it oversees to match assets and spending targets, said Patrick D. Fleming, chief investment officer.

The overhaul comes as the board is also increasing its internal management capabilities, as the state has now funded nine internal positions, and implementation of the asset allocation changes is pending the decision of which assets will be internally and externally managed, Mr. Fleming said.

The board oversees the money management of $13.4 billion in seven permanent funds and $5.7 billion in two non-permanent funds.

For the $7.2 billion Permanent Mineral Trust Fund, the largest of the permanent funds, the overall target to alternatives increases to 30% from 19%.

Within that alternatives target, the board created a new target to master limited partnerships to 4.5% of the total fund, while increasing the targets to private equity to 8% of the total portfolio from 4%, core real estate to 6% from 5.2%, non-core real estate to 4% from 2.3%, while diversified hedge funds remain unchanged at 7.5%.

Total fixed income and cash drops to 44% from 50% of the total fund. Within that allocation, intermediate-duration fixed income drops to 29% of the total fund from 35.2%, while the targets to cash and equivalents, convertibles and high-yield fixed income, of 3%, 2%, and 0.9% of the total fund, respectively, are eliminated. Treasury inflation-protected securities, bank loans and local currency emerging markets debt each increased to a 5% target, from 3.7%, 2.8% and 2.4%, respectively.

Total public equity drops to 26% from 31%. Within that allocation, broad domestic equity drops to 10% from 16.7%, domestic small cap increases to 3% from 1.3% and broad international equity remains at 13%.

The $188 million Permanent Land Fund and $21 million University Permanent Land Fund are also adopting the identical target asset allocation. Those two funds had an identical target allocation that differed slightly from the Permanent Mineral Trust Fund's prior allocation.

The $3.4 billion Common School Permanent Land Fund, the second largest of the permanent funds, which previously had the same target allocation as the Permanent Mineral Trust Fund, will now have targets of: 37% intermediate-duration fixed income, 15% core real estate, 12% bank loans, 9% broad international equity, 8% broad domestic equity, 7% local currency emerging markets debt, 6% MLPs, and 2% each non-core real estate, domestic small-cap equity and preferred stock.

Other funds with the same target allocation as the Common School Permanent Land Fund are the $570 million Hathaway Scholarship Endowment Fund and $118 Higher Education Endowment Fund.

Other funds, the $5.6 billion State Agency Pool of operating funds, the $1.9 billion Workers' Compensation Fund and the $83 million Pool A Investment Account which includes the Tobacco Settlement Fund, also each adopted their own unique target allocations.