Northwestern Memorial Hospital, Chicago, increased its target allocations to marketable alternatives strategies, real assets, international equities and private equity, said Steven P. Klimkowski, CIO. The hospital's combined $1.5 billion in foundation, pension and other funds have revised their long-term asset allocation targets, which are the same for each fund.
Marketable alternatives - including absolute return and non-directional strategies - will be raised to 15% from 2%, and real assets - real estate, timber and oil and gas - will be increased to 8% from 2%, Mr. Klimkowski said. International equities will be raised to 20% from 16%; and private equity, to 13% from 10%. Domestic equity will be reduced to 29% from 50%, and fixed income, to 15% from 20%.
U.S. equity was reduced to take advantage of other investment opportunities in less efficient market areas, not because of pessimism about the U.S. market, Mr. Klimkowski said. "We're not giving up anything in return, and (we're) getting a better risk profile," he said. "We actually think we've enhanced our return."
The fund will be searching for managers in the asset classes where allocations were raised. The fund will work with consultant Monticello Associates, which assisted with the allocation changes, to identify potential managers on an opportunistic basis.