A North Carolina House committee narrowly agreed Wednesday to let the North Carolina Retirement Systems, Raleigh, invest a larger share of assets in alternative investments.
The legislative change sought by state Treasurer Janet Cowell, the pension fund's sole trustee, was approved May 6 by the Senate with one abstention, while the House panel was split 14-13. The full House is expected to act before the legislative session ends this month.
“As the treasurer told the committee this morning, diversification is key to managing long-term risk to the pension fund, and ultimately taxpayers,” said spokesman Schorr Johnson in an e-mail. “The decline in the pension fund's bond portfolio over the last two months points to the importance of diversification and the need for passage this session.”
The Senate agreed to let the pension fund raise its alternatives allocation to 40% from the current 34%, while the House set an overall limit of 35% but allowed for higher limits in some categories. If the Senate agrees with the House version, the bill goes to the governor for signing, and would be effective immediately. If the two chambers disagree, there will have to be a conference and additional votes.
The $81.1 billion pension fund's current asset limits on alternatives are 10% real estate, 7.5% other alternatives, 6.5% hedge funds, 5% inflation-protection portfolio and 5% credit strategies.
