The $1.2 billion Sun Co. pension fund, Philadelphia, has hiked its fixed-income exposure and is redeploying its 10% real estate allocation into bonds and alternative investments, said Richard L. Veith, director of trust investments. The changes are the result of an asset allocation study completed with the help of Frank Russell.
Among the alternative investments will be partnerships and other vehicles making direct investments in emerging markets. The fund will not conduct a search for emerging markets partnerships, but will use Russell's database to compile a short list; Mr. Veith hopes to invest in one by the end of this year. Any future real estate investments will be on an opportunistic basis. For example, the fund has just hired AMB Institutional to manage $20 million in a new REIT.
The fund now has a target of 40% fixed income, up from 35%. With twice as many retirees as active workers, ``we have to keep an eye on the liabilities,'' said Mr. Veith. Existing bond managers will get the new allocation.