Manchester (Conn.) Retirement Allowance Fund committed $4 million to the PIMCO Real Return TIPS fund, the plan's first investment in Treasury inflation-protected securities, said Alan Desmarais, finance director. The $90 million pension plan also added $1 million each to a $14 million international equity portfolio managed by Causeway Capital and a $2.8 million real estate portfolio run by UBS Brinson, he said. The plan also added $500,000 each to hedge funds run by Pine Grove and Meridian, increasing them to $2.5 million each. The changes are the result of a recent asset allocation study conducted by UBS Financial Services.
Funding came from reducing three fixed-income portfolios: $4 million from a Lehman Aggregate fund run by State Street Global Advisors, leaving it with $6.5 million; and $1.5 million each from an active domestic bond portfolio run by PIMCO and a core-plus portfolio run by Western Asset, leaving each with $10 million. Officials wanted to reduce the plan's fixed-income exposure, believing that that asset class will not deliver good returns over the next few years, Mr. Desmarais said.
The plan's asset allocation is 47% domestic equity, 33% fixed income, 7% real estate, 5.5% each in hedge funds and international equity, and 2% cash. UBS Financial Services assisted.