State Board of Administration of Florida, Tallahassee, plans to recommend several changes to the trustees at the Oct. 12 board meeting, said Tom Herndon, executive director of the $93 billion pension fund. The staff will ask for a change in asset allocation, which would involve raising international equities to 12% of assets from the current 8%; reducing domestic equities to 55% from 58%; and domestic fixed income to 25% from 26%. It will also propose adopting new benchmarks. The international benchmark would become the MSCI All Country World Free index, excluding the U.S. The system has been using the MSCI EAFE index, which doesn’t include Canada and has fixed weights for emerging markets. The change would remove those restrictions, Mr. Herndon said.
Also, the staff will recommend that for real estate the system use both the Wilshire Real Estate Securities index and the Consumer Price index plus 450 basis points. The system has been using the NCREIF index. It also will seek approval to make its private equity benchmark a premium of 600 basis points above the domestic equity target return. It now uses the Wilshire index without the premium.
