Missouri Public School Retirement System, Jefferson City, is making a tactical shift to U.S. Treasuries from corporate debt, said Steve Yoakum, executive director. The move will focus the $29.5 billion systems 25% bond allocation on downside protection, which lowers risk and improves asset protection, while freeing up some risk budget to be used on more profitable investments. The shift also will move risk to where it might draw higher returns, such as from private equity or absolute return, he said. Its simply an admission that, where rates are now and where coupons are now (we) find it difficult to buy fixed-income securities.
Its not yet known if any managers will be terminated or new ones sought as a result of the shift, Mr. Yoakum said. Of the systems five bond managers, Seix Advisors and Wellington Management handle the most corporate debt; Mr. Yoakum said performance from both managers was fine.