Ventura County (Calif.) Employees’ Retirement Association approved changes to its target asset allocation, with an increase to private equity and reductions to public equity and core fixed income, recently released board meeting minutes show.
The new targets for asset classes seeing increases are 10% private equity, up from 5%; 8% absolute-return fixed income, up from 7%; 3% emerging markets equity, up from 2%; and 2% U.S. Treasuries, a new dedicated target allocation.
For asset classes that had their targets reduced, the new targets are 25% domestic large-cap equity, down from 27%; 10% domestic core fixed income, down from 12%; and the 5% global core bonds target will be eliminated.
Negative 10-year real yields in the U.K., Europe and Japan led to the decision to remove the global bonds target completely, said materials provided to the pension fund by investment consultant NEPC. The reduced public equity target reflects a lower return outlook following the recent strong rally in equities. The new U.S. Treasuries target is expected to hedge equity risk and provide liquidity, according to the materials.
Target allocations that remain the same are 12% international developed markets equity, 10% global equity, 7% real estate, 6% risk parity, 4% master limited partnerships and 3% domestic small/midcap equity.
The changes are the result of a recent NEPC asset/liability study. This study replaces an NEPC study that concluded in March, prior to the hiring of Daniel Gallagher, chief investment officer. Recommendations from the first study were not adopted. The $4.4 billion pension fund did not have a CIO at the time of the first study.
Mr. Gallagher could not be reached for additional information by press time.