Tucson (Ariz.) Supplemental Retirement System is increasing its targets to fixed income, international equities and real estate as a result of an asset-liability study, said Allan Bentkowski, investment manager of the $719 million pension fund.
The target to international equities will increase to 25% from 15% as a result of the study conducted by investment consultant Callan Associates. Fixed income will see a slight bump to 27% from 26% and real estate as well to 9% from 8%.
Funding for the target increases will come from the reduction of the domestic equity target to 34% from 46%. Infrastructure will remain unchanged at 5%.
Mr. Bentkowski said Callan has yet to work out specifics on how it will reallocate the assets. He said if a new international equity manager is hired as a result of the target allocation hike, there is the potential the pension fund could select a manager closer to the realm of emerging markets equities or international small-cap equities.
Callan conducts invitation-only searches for the pension fund. Specific information regarding how the pension fund will change its targets will likely be determined following the Aug. 21 board meeting.
The pension fund’s actual allocation as of April 30 was 49.4% domestic equities, 22.3% fixed income, 14.6% international equities, 7.6% real estate, 6% infrastructure and 0.1% cash/liquidity reserves.