Texas County & District Retirement System increased the equity allocation for the $20.7 billion pension fund at the expense of investment-grade fixed income and added a new direct-lending allocation.
Trustees of the Austin-based pension fund approved the following changes at an April 5 board meeting, confirmed Paul J. Williams, investment officer, in an e-mail. Public equity increased to 37% from 32%, including an increase in U.S. equity to 15.5% from 13.5%, non-U.S. equity to 13% from 11%, and emerging markets to 7% from 6%. Global equity remained unchanged at 1.5%.
Also, investment-grade fixed income declined to 5% from 10%.
The board approved a new direct-lending component for the pension fund with a 2% target allocation, about $400 million in current dollars. Funding for the new asset class came from a reduction of the high-yield bond allocation to 3% from 5%.
The following asset class targets did not change in the April asset allocation shift: hedge funds, 25%; private equity, 10%; opportunistic credit, 8%; REIT equities, 3%; distressed debt, 3%; private real estate, 2%; and commodities, 2%.
TCDRS will use “private equity-like vehicles” for its direct lending investments, Mr. Williams wrote in his e-mail, noting that manager sourcing will be handled by the fund's consultant, Cliffwater.