Kern County Employees’ Retirement Association, Bakersfield, Calif., has added a target allocation to private credit and doubled its target to real estate, said Peter Tirp, chief investment officer.
The $3.6 billion pension fund’s board approved the changes earlier this month. The new private credit target is 5% and real estate is increasing to 10% from 5%. Mr. Tirp said most of the new real estate commitments would be for value-added investments.
Implementation will begin sometime later this year and will take about 18 months, Mr. Tirp said. He said the pension fund will “probably shift (domestic) equities lower” because they are significantly overweight, as well as international equity, core fixed income and private equity funds of funds, to meet the new allocations. He did not provide specific numbers.
Previously the targets were: 29% fixed income, 23% domestic equity, 22% international equity, 10% hedge funds, 6% commodities and 5% each in private equity and real estate.
As of June 30, 2015, the most recent data available, actual allocations were: 26.8% fixed income, 26.2% domestic equity, 23.4% international equity, 8.3% hedge funds, 5.6% real estate, 5.4% private equity, 4.2% commodities, and the rest in cash.
Separately, pension fund staff has recommended hiring AllianceBernstein to run $80 million in active emerging markets equities to replace Vontobel Asset Management. The pension fund terminated Vontobel earlier this year after Rajiv Jain, co-CEO and chief investment officer, announced he was leaving the firm.
Mr. Tirp said AllianceBernstein will be making a presentation to the investment committee at a special meeting on Monday. If the committee makes the recommendation, the board of trustees will likely vote on the recommendation at its Aug. 10 meeting.