Etablissement de Retraite Additionnelle de la Fonction Publique, Paris, will invest an additional €5.5 billion ($6.8 billion) in equities over the next several years, increasing its allocation to 40% of the total portfolio, up from the current 25%, said Philippe Desfosses, CEO at the pension fund.
Changes to the €20 billion pension fund's investment portfolio follow changes to regulation with “immediate effect,” Mr. Desfosses said in a telephone interview.
Fixed-income accounts for about 70% of the current asset allocation. Mr. Desfosses said he has for some time argued for reducing this allocation to fixed income, and increasing exposure to equities, and “finally the authorities have agreed,” he said. The pension fund expects to rebalance the portfolio by 2020. “(But) should the bond market stay at the current level, we might increase the exposure to equities more quickly than expected,” Mr. Desfosses said.
Allocation to non-European Union equities could reach as much as 30% of the total equity allocation, he said. The increased allocation to equities will be managed by current money managers for the pension fund, and Mr. Desfosses said new hires will also be considered.