Oklahoma Tobacco Settlement Endowment Trust, Oklahoma City, plans on issuing an RFP for European direct lending managers in the first half of this year, said Lisa Murray, chief investment officer at the Oklahoma state treasurer's office, which oversees the $956 million trust.
The trust does not currently have any European direct lending managers. Investment consultant NEPC is assisting. Once approved, the RFP is expected to be posted on NEPC's website. A timeline for the search is still being determined.
The direct lending manager or managers will split a $35 million commitment with existing core real estate manager AEW Capital Management, which currently manages $27 million for the trust.
At last week's board meeting, the trust's private debt and real estate targets were each raised 2 percentage points to 10% each of the overall portfolio. Dynamic fixed income was reduced 4 percentage points to 4%.
As a result of the changes, dynamic fixed-income manager Western Asset Management Co. will see its allocation cut in half to roughly $37 million. On the reason for the reduction, NEPC said in materials prepared for the board meeting: “The strategy invests in primarily global fixed income, where rates are very low and after inflation, have negative real yields.”
Targets that remain the same are domestic large-cap equity at 20%, international equity (unhedged) at 15%, domestic core fixed-income and absolute-return fixed income at 10% each, global asset allocation at 9%, high-yield bonds at 7% and domestic smidcap equities at 5%.