Imperial County Employees' Retirement System, El Centro, Calif., is adding a new target allocation to private credit and eliminating its 5% target to commodities, said Michael Hermanson, administrator, in an e-mail.
The $689 million pension fund “has been disappointed with losses incurred from our commodity allocations and does not believe the inflation play is compelling at this time,” Mr. Hermanson said.
As a result, the pension fund will create the new 5% allocation to private credit and conduct an invitation-only search for managers. Mr. Hermanson said the pension fund will also conduct invitation-only searches for value-added real estate managers, reallocating funds within the real estate allocation to provide room for value-added managers, and for private equity managers to get that allocation up to its 5% target.
Gresham Investment Management and BlackRock are the pension fund's current commodity managers, managing $9 million and $4 million, respectively. Brian Beades, BlackRock spokesman, and Kathleen Cordoza, spokeswoman at Nuveen Investments, majority owner of Gresham, could not be immediately reached seeking comment.
The previous target allocation was 34% domestic equities; 23% domestic core fixed income; 16% international developed equities; 5% each, commodities, emerging markets equities, private equity, real estate and Treasury inflation-protected securities; and 2% high-yield fixed income.
As of June 30, the actual allocation was: 33.1% domestic equities, 27.9% domestic core fixed income, 16.5% international developed equities, 8.9% real estate, 6% emerging markets equities, 2.4% private equity, 2.2% Treasury inflation-protected securities, 2.1% commodities and the rest in cash. Investment consultant Verus is assisting.