State of Wisconsin Investment Board, Madison, could search for a risk-parity manager in the first quarter of next year to implement the initial phase of leveraging its $64.6 billion core fund, according to a board report on a potential implement plan.
The board is still considering a time frame for conducting the search and hasn’t set a date for making a decision, said Vicki Hearing, public information officer at the board, which oversees a total of $74.4 billion.
The new manager would use a derivatives overlay to achieve a 2% risk-parity allocation, giving the fund an effective 102% allocation initially.
The leverage is part of new allocation targets the board adopted in January to achieve an asset allocation of 104% of its $64.6 billion core fund. The target allocation is 28% U.S. equities, 25% international equities, 26% fixed income, 7% TIPS, and 6% each private equity, real estate and absolute return.
SWIB eventually could raise the leverage in 2012 to give the fund a 120% allocation, according to the report.
Strategic Investment Solutions, a board investment consultant, is assisting.