North Carolina Retirement Systems, Raleigh, could raise its alternative investments allocation to 40% of total assets under a bill approved Thursday by a state Senate committee. The bill has not been scheduled for full consideration by the Senate or House.
The pension fund currently invests 20% of its assets in alternatives.
The bill is backed by state Treasurer Janet Cowell, the sole trustee of the $78.1 billion pension fund, who is seeking more flexibility on asset allocation.
Along with reducing exposure to public equities, a briefing memo from the treasurer's office notes that an allocation to fixed income higher than its peers “will result in serious underperformance of the overall portfolio.” The legislation also removes a 1.5% limit on direct investment in a single company's stock.
The legislative changes would also allow the pension fund to avoid selling off well-performing assets that exceed the current statutory limits for alternative asset classes, the memo noted. The pension fund's current asset limits on alternatives are 10% real estate, 6.5% hedge funds, 5% each in an inflation-protection portfolio and credit strategies, and 7.5% other alternatives.
The current asset allocation is 44.6% global equity, 35.4% fixed income, 7.9% real estate, 4.9% alternatives, 4.1% credit strategies and 3.1% inflation strategies.