Minnesota State Board of Investment, St. Paul, could put more of its $60 billion in state retirement assets into international equity and domestic fixed income, and trim allocations to domestic stock, as a result of an asset-liability study approved by the board's investment advisory committee Tuesday.
The committee also approved taking measures to park uncalled money targeted for private market investments in public equities. Currently, 7.4% of total assets are uncalled commitments designated for the alternatives allocation, and parked in fixed income.
The study, conducted by investment consultant Callan Associates, recommended the board set policy target allocations of 39% to U.S. equities, down from 45%; 19% to international equities, up from 15%; and 20% to fixed income, up from 18%. Its 20% target to private markets and 2% to cash remain the same.
The changes, if approved by the board, would take effect in the fiscal year beginning July 1. The last asset-liability study at the board, which oversees a combined $80 billion in state pension retirement and other assets, was in 2008.
The board meets June 2 in St. Paul.
Mansco Perry III, MSBI executive director and chief investment officer, stressed the allocation changes were minor, although he said MSBI could hire new public equity managers and terminate others as a result of the moves.
"If you look closely, there's really not a whole lot of variance in these changes," Mr. Perry said. "I'm looking at this in terms of broad investments, and they're not changing very much."
Additionally, Mr. Perry said he anticipates that MSBI's passive equity portfolio, at 33% of overall U.S. equities, could be increased, although he gave no specifics. The board has similar amounts — around 33% — each in enhanced index equities and active stocks.