Milwaukee City Employes' Retirement System will invest in hedge funds for the first time under a new asset allocation it adopted, according to Tom Rick, chief investment officer.
The system will allocate 5%, or $210 million, of its $4.2 billion in assets to hedge funds and absolute-return strategies.
The new asset mix also calls for a drop in its equity and fixed-income allocations to 55% and 25% respectively, while raising its real assets allocation to 10% and private equity to 5%.
The system's board hasn't yet determined the types of hedge funds and absolute-return strategies or their structure, such as whether to allocate to direct funds or funds of funds, Mr. Rick said in an e-mail.
The retirement system plans to conduct asset class structure reviews for its allocations to determine what manager changes and searches it would undertake and will make decisions in the summer, Mr. Rick said in the e-mail.
The pension fund's actual allocation as of Dec. 31 was 63% equity, with a breakout of 31% U.S., 22% international and 10% global; 26% fixed income; 9% real estate; 1% private equity; and 1% cash. Its previous target allocation was 63% equity, with a breakout of 31% U.S., 22% international and 10% global; 28% fixed income; 7% real estate; and 2% private equity.
Callan Associates, the pension fund's investment consultant, assisted in the asset allocation study that resulted in the new mix and will assist in the asset class structure reviews and other changes.
