Missouri Local Government Employees Retirement System, Jefferson City, added emerging markets debt and increased its global equity and alternatives allocations, confirmed Brian Collett, chief investment officer.
The $4.5 billion system made the moves, effective July 1, following an asset-liability study, Mr. Collett said in a telephone interview.
The system has a shortlist of managers it is considering to run the new emerging markets debt allocation, about $180 million. A decision is expected in September, according to Mr. Collett.
No other searches or hires are expected, with the system “probably moving assets around” to meet the new target allocations, he said.
Despite the addition of emerging markets debt, the system's overall fixed-income allocation was cut to 24% from 24.5%. The new allocation's breakdown is U.S. fixed income, 7.5% of total assets; U.S. long duration and global fixed income, 5% each; emerging markets debt, 4%; and global inflation-linked, 2.5%.
Alternatives increased to 27.25% from 22%. Other allocation changes are: real estate increased to 7.5% of total assets, from 5%; private equity rose to 6.5% from 5%; timberland was cut to 4% from 5%; alpha portfolio, to 4% from 5%; commodities, to 2.75% from 2%; and other real assets at 2.5%, a category that previously was included in private equity.
Overall equity decreased to 48.75% from 53.5%. Domestic equity was cut to 22.25% of total assets, from 27.25%; global equity rose to 19% from 14.25%; international equity, trimmed to 5% from 10%; and emerging markets equities, hiked to 2.5% from 2%.
The system also changed the rate-of-return assumption to 7.25% from 7.5% for fiscal year 2012, effective July 1, based on the asset-liability study and capital market assumptions, Mr. Collett said.