Arizona pension fund OKs new asset mix

Arizona State Retirement System, Phoenix, will add allocations to emerging markets debt and private debt under a plan approved Friday by the $27.8 billion pension fund's board of trustees, confirmed spokesman David Cannella.

The new allocations — at 4% and 3% of total assets, respectively — are the result of a study by investment consultant NEPC and a recommendation by the retirement system's investment committee in April.

Also under the new asset mix, international developed markets large-cap equities increases one percentage point, to 14%; international developed markets small-cap equities, also rises one percentage point, to 3%; and emerging markets equities is doubled, to 6%.

Domestic high-yield securities will go to 5% from 2%; real estate, to 8% from 6%; and commodities, to 4% from 3%. Private equity remains the same at 7%.

In addition, the retirement system is creating new allocations to infrastructure and farmland/timber, with each having a target of zero and a target range of zero to 3%.

All domestic equity allocations are reduced, with large cap down five percentage points to 23%, and midcap and small cap each cut one point, to 5%. Domestic core fixed income is reduced 11 percentage points, to 13%.