Oregon Investment Council, Tigard, cut the allocation to “growth assets” in its $60.2 million Higher Education Pooled Endowment Fund to 60% from 67%.
The “growth assets” category covers domestic equities, international equities and private equities.
The domestic and international equity suballocations were dropped five percentage points each to 25%; the private equity suballocation is increasing three percentage points to 10%. The move was recommended in a report from consultant SIS and staff.
The council at its meeting Wednesday decided to beef up the education fund’s “inflation hedging” allocation to 15% from 3% by adding a new 5% allocation to TIPS and a 5% allocation to other hard assets. The fund’s real estate suballocation is increasing two percentage points to 5%. Fixed income is dropping five percentage points to 25%.
The changes are expected to result in hiring new managers but the council is not scheduled to decide on an implementation plan until September, the report indicates.
Separately, the council, which also oversees the $50.9 billion Oregon Public Employees Retirement Fund, Salem, is considering increasing the size of that fund’s real estate commitments in strategies in which council staff would have greater control, such as separate accounts or a new idea called “club deals.”
According to a separate staff report, these clubs would consist of one general partner and three limited partners investing in real estate.
The council is also considering reducing the value-added allocation in its real estate portfolio to 15% from 20% as well as making more large commitments in real estate — “in the $500 million range,” according to a staff real estate portfolio review.
The pension fund’s real estate allocation is now 11%, with $982 million in value-added real estate and unfunded commitments as of June 30. The suballocation cut from value added would be either added to the council’s 30% core strategies (either private or publicly traded real estate) or allocated to core real estate in mature non-U.S. markets such as London, Paris, Hong Kong and Tokyo, the report recommends.