Several institutional investors are changing or expanding their investments, or considering doing so.
• The California Public Employees' Retirement System, Sacramento, approved a new asset mix for its $1.4 billion voluntary long-term care program. It will make allocations to three new asset classes: 7% to Treasury inflation-protected securities; 10% to high-yield bonds; and 5% to real estate investment trusts. Domestic equities will be reduced to 29% from 42%; international equities to 19% from 20%; global fixed income to 30% from 37%; and cash to zero from 1%. The $186.9 billion CalPERS made the changes to reduce risk. Wilshire assisted.
• The New York City Retirement Systems increased its private equity allocation, including real estate, to $4 billion from $500 million. Deborah Gallegos, chief investment officer of the city's bureau of asset management, which oversees the $80 billion pension system, said the city currently has $414 million invested in private equity and real estate and plans to invest the additional $3.6 billion by 2010. The funds could commit $700 million to new and add-on commitments in private equity and real estate by the end of this year. Ms. Gallegos did not give additional details. Earlier this year, the city hired JPMorgan Fleming Asset Management and Fairview Capital Partners to build a private equity manager-of-managers programs. The city's private equity consultant is Pacific Corporate Group.
• The Louisiana School Employees' Retirement System, Baton Rouge, will decide on a possible real estate allocation at its quarterly board meeting May 16-17, said Julia LeBlanc, chief investment officer. The investment committee recommended the board invest 2% to 3% of total assets in a commingled real estate fund to further diversify the $1.5 billion fund's investments and help increase returns. It would be the system's first real estate investment.
Consultant Segal Advisors recommended the allocation late last year, after an asset allocation study.
• Moody Bible Institute, Chicago, might add REITs and international bonds as asset classes for its $35 million pension plan, said Richard Campbell, chief financial officer. Fund officials want to further diversify and reduce risk in the portfolio, and searches might be initiated this year, said Jim Chadwick, chief of investments. Consultant DiMeo Schneider will assist.
• The board of directors of the Health Care Foundation of Greater Kansas City, Mo., will consider adding real estate investments later this year, but specifics are not yet available, said Dan Couch, chief financial officer for the $430 million foundation. Consultant Ennis Knupp will assist.
• Baptist Health South Florida, Coral Gables, Fla., might add lifecycle funds to its $230 million 403(b) and $70 million 401(k) plans, said Bob Shirk, corporate director of benefits. The decision would be subject to approval by the retirement plan committee and isn't likely for at least six months. Consulting Services Group, the plans' consultant, will assist. The plans, which mirror each other, offer 13 options each. AIG VALIC is bundled provider.
• The board of the $13.37 billion Kentucky Retirement Systems, Frankfort, plans to conduct an asset allocation study, said William P. Hanes, executive director. The study will begin after actuary Segal completes an asset-liability study, he said. Fund officials haven't decided whether to use Mercer Investment Consulting, the fund's consultant, to conduct the study. The system's current asset allocation is 42.1% domestic stocks, 33.7% fixed income, 15.9% international stocks, 5.2% cash, 3% private equity and 0.1% real estate equity.
• The University of Pennsylvania, Philadelphia, plans to increase its $4 billion endowment's real estate, private equity and natural resources investments to 25% of total assets over the next five to seven years from 10% currently, according to Kristin Gilbertson, chief investment officer. "The strategic asset allocation is long term in nature but is reviewed periodically," Ms. Gilbertson wrote in an e-mail. "The recent changes should be viewed as evolutionary. Penn has been committed to increased diversification for some time." No specific investment timetable was given.
• Minnkota Power Cooperative Inc., Grand Forks, N.D., is considering adding REITs to its $105 million money-purchase plan, said Douglas Gregoire, human resources administrator. Consultant Thomas Weisel Partners recommended that plan officials educate themselves about the asset class, and Mr. Gregoire said they may decide on whether to add REITs during the next 12 months. The plan's asset allocation is 60% equities, 26% fixed-income and 14% hedge funds.