Phoenix City Employees' Retirement System hired Brigade Capital Management and DDJ Capital Management to run about $63 million each in high-yield fixed income, said Greg Fitchet, investment officDDJ Capital Managementtal Management and DDJ Capital Management to run about $63 million each in high-yield fixed income, said Greg Fitchet, investment officer.
The $2.5 billion pension fund conducted a shortlist search for high-yield managers following the creation in March 2017 of a new 5% target to high yield. There were no other finalists.
Also in March, the pension fund created a new 3% target to bank loans. Following a shortlist search, the pension fund will interview Pacific Asset Management and THL Credit as finalists for the $75 million portfolio at its March 1 board meeting.
Funding comes from other asset classes that have been eliminated or reduced. Also in March, the pension fund eliminated its 8% target to global tactical asset allocation strategies and dropped the targets to domestic equity to 16% from 18%, international developed markets equities to 9% from 16%, and hedge funds to 5% from 15%.
The pension fund also created new targets of 8% to emerging markets equities, 7% to Treasury inflation-protected securities, and 4% each to infrastructure and natural resources, and increased private equity to 9% from 3%.
The TIPS target joined investment-grade bonds in the pension fund's total rate-sensitive category, with the latter being decreased to 15% from 20%. High yield and bank loans join emerging markets debt in the total credit category, with emerging markets debt dropping to 3% from 5%. Infrastructure and natural resources join real estate in the real assets category, as real estate dropped to 12% from 15%.
Investment consultant Meketa Investment Group assists with all searches.