Tucson (Ariz.) Supplemental Retirement System will conduct an invitation-only search for international small-cap equity managers, said Allan Bentkowski, investment manager of the $721 million pension fund.
The shortlist search by investment consultant Callan Associates is the result of an increase in the target to international equities to 25% from 15% in May.
The amount to be allocated will depend on other changes in the overall international equity portfolio. Mr. Bentkowski said pension fund officials are approaching current managers Aberdeen Asset Management and Causeway Capital Management about adding emerging markets investments to their portfolios.
Aberdeen runs $46 million in an active, commingled international equity portfolio, and Causeway runs $58 million in a similar portfolio that has more of a value tilt, Mr. Bentkowski said.
The pension fund hopes to have the process completed by the end of the year.
The increase in the international equity target is being funded by a decrease in domestic equities to 34% from 46%. Domestic equities are also funding one-point increases in the fixed-income target to, 27% from 26%, and real estate, to 9% from 8%. The infrastructure target is remaining unchanged at 5%.
Which domestic equity managers would see reductions in their portfolios has yet to be determined.
As of July 31, the pension fund’s actual allocation was 49.4% domestic equities, 22.2% fixed income, 14.5% international equities, 7.6% real estate, 5.9% infrastructure and 0.4% cash.