Stanislaus County Employees’ Retirement Association, Modesto, Calif., will begin a search in October for risk-parity managers to run a total of up to $252 million and U.S. Treasury fixed-income managers to run up to a total of $54 million as a result of an overhaul of its target asset allocation, board meeting materials said.
The $1.8 billion pension fund’s investment consultant, Verus Advisory, set the timeline at the pension fund’s board meeting June 28. The board had approved a new target asset allocation at its May 24 meeting, what Verus calls a “six-year functionally focused portfolio,” which categorizes certain asset classes as liquid to pay benefits in the future, matching the timing of bond cash flows with benefit payments. The rest of the overall portfolio can then be invested aggressively, said previous board meeting materials.
The new allocation creates new targets of 18% short-term government/credit fixed income, 14% risk parity, 5% each value-added real estate and private equity, and 3% U.S. Treasury fixed income. There is also a new 1% target to cash.
Targets being decreased are domestic equity, to 15% from 38.2%; and core real estate, to 5% from 6.5%. Targets being increased are international equities, to 20% from 18%; and private credit, to 14% from 7.5%. The 29.8% target allocation to core fixed income is being eliminated.
There will be additional searches for liquidity managers, which include short-term government/credit fixed-income managers, beginning in November; private credit managers, beginning in January; and value-added real estate managers and private equity managers, beginning in February.
Whether any current managers would be terminated could not be learned by press time.
Rick Santos, executive director, could not be reached to provide further information by press time.