Contra Costa County Employees’ Retirement Association, Concord, Calif., will launch a search for short-duration government/credit fixed-income managers to run a total of up to $1.6 billion in the next few weeks, said Timothy Price, chief investment officer, in an e-mail.
The $6.9 billion pension fund will issue a request for information in the next several weeks for short-duration government/credit fixed-income managers to run up to 24% of the total pension fund. The target was established at the pension fund’s Dec. 2 board meeting following an asset allocation study.
The new allocation, which the pension fund calls a “functionally focused portfolio,” consists of three pools of liquidity, growth and diversifying assets. Liquidity assets would make up 25% of the total pension fund — 24% in short duration and 1% in cash.
Mr. Price said the RFI “is intended to solicit general feedback on the conceptual framework of our liquidity portfolio and the managers’ assessments of how their investment capabilities might be brought to bear on the mandate.”
Based on the information from the RFI, the pension fund will issue an RFP, likely in the second quarter, Mr. Price said. Multiple managers would likely be hired, and all managers are invited to respond to the RFI.
As of Jan. 20, the pension fund’s actual allocation to domestic core fixed income was 19.5%, high yield was 4.5% and international fixed income was 4%. The previous fixed-income targets were 19.5% to domestic core fixed income, 7.4% to high-yield fixed income, 2.5% to international fixed income and 1.3% to Treasury inflation-protected securities. The high yield, international fixed income and TIPS targets have been eliminated.
Managers as of Jan. 20 were Pacific Investment Management Co. (with $408 million in the PIMCO Total Return Fund), Goldman Sachs Asset Management and Lord, Abbett & Co. with $336 million and $334 million, respectively, in domestic fixed income, Allianz Global Investors with $320 million in high-yield fixed income, Lazard Asset Management with $289 million in international fixed income, AFL-CIO Housing Investment Trust with $241 million in domestic fixed income, and Torchlight Investors with $123 million in its debt opportunities funds.
The RFI will be available on the pension fund’s website.
Investment consultant Verus Advisory is assisting.
