Virginia Retirement System, Richmond, committed $1 billion to a new internal, actively managed domestic equity strategy, said Jeanne Chenault, a spokeswoman for the $49 billion system.
In addition, the system committed $100 million to Lion Industrial Trust Preferred, a commingled real estate fund.
Funding for both moves is from cash, Ms. Chenault said.
Separately, VRS announced an unfunded mandate to create an internal, actively managed tactical foreign currency hedge, Ms. Chenault said. Additional information wasn’t available by press time.
In addition, the board approved a staff recommendation to reduce the fund’s risk level by scaling back its 70% equities/30% fixed income long-term asset allocation target — a mix that had been in place since 1995 — to 60% equities, 40% fixed income. It was unclear whether the change would result in searches. It also passed a recommendation to cut its expected rate of return to 7% from 7.5%.
“My best guess is equity will outperform fixed (income) over the next 10 years, but the expected excess does not compensate for the risk,” Charles Grant, VRS chief investment officer, said during a board meeting on Thursday.
“We dialed back the risk level,” he added in an interview after the meeting.