Minnesota State Board of Investment, St. Paul, with a combined $42 billion in retirement assets, will slightly reduce domestic bonds and increase alternatives for retirees under a new asset mix that will be established June 30, 2009, said Howard J. Bicker, executive director.
A state law passed last year requires that the retiree fund merge with the active employees’ retirement fund if the retiree plan funding ratio falls below 80%. As of June 30, the retiree plan ratio fell to 79.7%. Because the asset allocation for the retiree and active employees’ funds are so similar, no manager terminations or additions are expected, Mr. Bicker said.
Under the new asset mix, the combined funds will have target allocations to U.S. equity of 45%; alternatives, 20%; U.S. bonds, 18%; international equities, 15%; and cash, 2%.
For the retirees, U.S. bonds will be cut from 25% and alternatives will be increased from 12%. Also, cash will shrink from 3%. For the active employees, domestic bonds will decrease one percentage point, alternatives will remain stable, and cash will increase by one percentage point.
The Minnesota board managed a total of $53.6 billion of retirement and state investment assets as of Sept. 30, according to Mr. Bicker.