Kentucky Retirement Systems, Frankfort, is expanding its relationship with domestic all-cap equity manager River Road Asset Management, said David Peden, chief investment officer.
Last week, the $15 billion pension fund board approved raising River Road's allocation to 2.25% of the total KRS portfolio, or to roughly $300 million.
River Road was initially hired several years ago to run $50 million in its dividend all-cap equity strategy. As of March 31, KRS had $42.7 million total invested in the strategy.
To reach its new allocation, KRS will start by increasing its allocation to the existing River Road strategy and transfer all the assets over time to a new strategy — River Road's focused absolute-value strategy, a concentrated, “best ideas” domestic all-cap equity strategy, Mr. Peden said.
The retirement system also raised its target allocation to KKR Prisma's discretionary hedge fund-of-funds portfolio to 5% of the total portfolio up from its current 3.33% or to roughly $750 million from $500 million. The other 5 percentage points of KRS' 10% hedge fund target is a portfolio of direct hedge fund investments, which KKR Prisma and investment consultant Albourne Partners are helping KRS build out.
Simultaneously, KRS is winding down its investments with hedge fund-of-funds managers Blackstone Group and Pacific Alternative Asset Management Co., which previously had targets of 3.33% each, and will help fund KRS' new hedge fund investments and the increase to KKR Prisma.
