State of Wisconsin Investment Board, Madison, approved leveraging its $67.8 billion core fund to achieve an asset allocation of 104%, according to a statement from Vicki Hearing, public information officer.
Under the new asset allocation approved by the board, the allocation could range between 100% and 106%, depending on the leverage employed.
The new target allocation is 28% U.S. equities, 25% international equities, 26% fixed income, 7% TIPS, and 6% each private equity, real estate and multiasset.
Strategic Investment Solutions, the board’s consultant, assisted in developing the leveraged asset allocation.
The leverage would enable the board to reduce its equity exposure and increase allocations to lower-returning and lower-risk assets that offer greater diversification benefits while seeking to meet the board’s expected actuarial return.
The board, which oversees a total of $70 billion, would implement the leverage through use of synthetic futures and swaps, according to a December investment staff report to the board.
Ms. Hearing said further information about Tuesday’s action wasn’t available.
The board’s current allocation is 29% U.S. equities, 26% each for international equities and fixed income, 3% Treasury inflation-protected securities, 6% each for private equity and real estate, and 4% multiasset.
The board also approved keeping the $4.5 billion all-equity variable fund allocation at 69% U.S. equity, 30% international equity and a 1% multiasset strategy for liquidity purposes.