Chicago Policemen’s Annuity & Benefit Fund is searching for at least one global tactical asset allocation manager to run up to 10% of plan assets, or $300 million.
The search is the first following the adoption of a new asset mix by the board of the $3.2 billion fund on Jan. 24, Samuel Kunz, chief investment officer, said in a telephone interview.
The overall target allocation to equities was reduced to 41% of plan assets from 48%. The target for U.S. equities was dropped by nine percentage points to 21% and the international equity target increased by two percentage points to 20%.
The combined fixed-income and cash allocation was reduced by three percentage points to 22%.
The overall target for private capital asset classes dropped to 14% from 18%. Within that asset class, the private equity target remained at 7%, while the target allocations to infrastructure and real estate dropped by two percentage points each to 2% and 5%, respectively.
Trustees increased the aggregate alternative investment allocation to 23% from 9%. Within alternatives, the target allocation to tactical and alpha strategies (including GTAA) was raised to 19% from 9% and real assets got a first-time target allocation of 4%.
The fund first will review the structure of the tactical and alpha strategies and equities programs, Mr. Kunz said. The fixed-income and private capital structures will be reviewed at the earliest in the second half of 2011, Mr. Kunz said.
Funding for the GTAA hires will come from the reduction in U.S. equities, but Mr. Kunz stressed that details about the reduction in the domestic equity allocation have yet to be determined.
RFP materials are available at www.chipabf.org/6investments/RFP_active.html. Proposals are due April 29. The RFP didn’t specify a selection date.