Los Angeles County Employees Retirement Association, Pasadena, Calif., adopted a new asset allocation that reduces its policy target to “other opportunities,” while increasing global equities and fixed income, said Vache Mahseredjian, interim chief investment officer, in an e-mail.
The $47 billion pension fund cut its “other opportunities” target to zero from 5%, with a target range of zero to 5%, raised global equities by 1.5 percentage points to 41.4% and increased fixed income by 3.5 percentage points to 27.8%, Mr. Mahseredjian said.
Targets for all other asset classes remain the same: real estate, 11%; private equity, 10%; hedge funds, 5%; commodities, 2.8%; and cash, 2%.
No terminations will result from the change because LACERA had not made any “other opportunities” investments. Searches will be necessary to fill the “other opportunities” allocation, Mr. Mahseredjian wrote.
The “other opportunities” asset class is designed to be an open mandate set of assets that are best investment ideas at this time, according to a memo to the board from Meketa Investment Group, LACERA’s general investment consultant. LACERA officials currently are conducting an invitation-only search for a risk-parity manager. Staff might recommend that the board include risk parity in the “other opportunities” asset allocation later in the summer, the memo stated.
Separately, LACERA hired three activist equity managers to run a total of $470 million. Cevian Capital will manage $250 million; JANA Partners, $120 million; and Symphony Financial Partners, $100 million. LACERA had launched an RFI in November 2014. Funding will come from equities and cash.