Nestle USA Inc. plans to more than double its allocation to "real assets" for its $2.1 billion defined benefit plan, said Manfred R. Lehmann, vice president and treasurer for the Glendale, Calif., company.
"Real" assets — which include real estate, Treasury inflation protected securities, hedge funds and other alternatives — will be raised to 45% of fund assets from 20%. Stocks would be cut to 45% from 55%, and fixed income to 10% from 25%.
Nestle will "put less of our risk budget into equities and more into the real return space," Mr. Lehmann told a Strategic Research Institute conference earlier this month in Scottsdale, Ariz.
The fund may make allocations to pure alpha products, such as one offered by Bridgewater Associates, and PIMCO's All Asset Fund. It may also increase commodities from a $20 million investment in PIMCO's CommodityRealReturn Strategy. It will make commitments to portable alpha strategies, and there are plans to increase private equities to 15% of total assets from 3% over the next six years.
Currently, Nestle is searching for a consultant to work primarily on optimizing alpha strategies. Under consideration are incumbent Russell Investment Group, Watson Wyatt and Consulting Group Institutional Services. Decisions on a new asset mix and a consultant are expected this spring.
