Arizona State Retirement System, Phoenix, plans to issue an RFP in the next few weeks for a private equity manager to run up to $1.3 billion, confirmed Paul Matson, executive director. Funding will come from reducing the $25.5 billion system's $11 billion large-cap equity portfolio. No managers will be terminated.
Private equity is a new asset class for the system, with a target allocation of 5%. Fund officials reduced the large-cap equity target to 31% from 43%, increased international equities to 18% from 15%, and increased the midcap and small-cap equity target to 7% each from 5%. The system's 26% allocation to fixed income and 6% allocation to real estate remain unchanged. The officials also discussed potential allocations to an overlay on top of an unidentified asset class and opportunistic strategies that would include microcap equities, commodities and infrastructure.
The search will be done without the help of a consultant. The RFP will be available at www.azasrs.gov. Plan officials hope to make a selection by late January or early February, Mr. Matson said.