Louisiana Municipal Police Employees Retirement System, Baton Rouge, is planning searches expected to be worth a total of up to $225 million for emerging markets equity, emerging markets debt and bank loan managers over the next year following the adoption of a new asset allocation, confirmed Kathy Bourque, director.
The $1.6 billion pension fund's board of trustees approved the new allocation at its board meeting on Wednesday. The pension fund's new investment consultant, NEPC, hired in February, conducted the asset allocation study.
The emerging markets equity target increases to 8% from 7%, although the pension fund had no money in the asset class as of May 31.
The new allocation also creates new targets to real assets (liquid) at 5%, bank loan and emerging markets debt (local currency) at 3% each, and private debt at 1.5%.
Specific details regarding searches for the new asset classes, as well as how the new asset classes will be funded, have yet to be discussed.
The target to domestic large-cap equity drops to 17% from 21%, core fixed income to 11% from 16.5%, small- and midcap domestic equity to 8% from 9% and hedge funds to 3% from 5%.
The target to international developed markets equity remains unchanged at 21%, while a target of 7% specifically to international small cap has been eliminated. A target allocation to cash of 0.5% has also been eliminated.
The pension fund also created new targets to global asset allocation and private equity of 5% and 1.5%, respectively. There were no previous targets although the pension fund had actual allocations of 4.8% and 1.2%, respectively, to the asset classes as of May 31.
The targets to real estate and high-yield bonds remain unchanged at 10% and 3%, respectively.
As of May 31, the pension fund's actual asset allocation was 25.5% international equities, 21.6% domestic large-cap equities, 14.9% core fixed income, 10.8% small- and midcap domestic equities, 10.1% real estate, 5% high-yield bonds, 4.8% global asset allocation, 3% hedge funds, 2.9% real assets (liquid), 1.2% private debt and 0.2% cash.