Management Employees Pension Board, Edmonton, Alberta, increased its target allocation to fixed income and money markets by cutting targets to equity and inflation-sensitive investments in a new investment policy effective Oct. 1.
The board of the C$3.9 billion ($2.9 billion) pension fund set a 55% equity target, down from 59%; 25% inflation-sensitive target, down from 25.5%, and a 20% target in fixed income and money markets, up from 15.5%, according to the plan's website.
Within equities, global equity's target is now 30%, along with 13% for Canadian equity, 7% for private equity and 5% for emerging markets equity. The policy for inflation-sensitive investments sets targets of 9% to real return and 8% each to infrastructure and real estate. Under fixed income and money markets, private debt and mortgages were set at a 4% target each, and fixed income and money markets combined was set at 12%.
Also, the board's new equity allocation includes an increase in permitted investments in hedge funds, to 12% from the current 5% limit.
The previous suballocation targets could not be learned by press time.
The pension fund's actual equity allocation as of Dec. 31 was 37.1% global equity, 13.8% Canadian equity, 5.6% private equity and 4.4% emerging markets equities. In inflation-sensitive investments, the actual allocation as of Dec. 31 was 10.1% real return, 6.7% real estate and 5.2% infrastructure. Under fixed income and money markets, the actual allocation as of Dec. 31, was 9% fixed income and money markets, 5% mortgages and 1.5% private debt.
The board's 1.6% actual allocation to strategic opportunities and tactical allocation as of Dec. 31 was not reflected in the new policy mix. Policy documents do not detail the board's actual hedge fund allocation as of Dec. 31. All actual allocations as of Dec. 31 are from the board's 2014 annual report.
Management of plan assets is done by the C$80 billion Alberta Investment Management Co., Edmonton, based on the policy set by the MEPB.
Brenda Chisholm, plan board manager, could not be immediately reached for further details.