Illinois Municipal Retirement Fund, Oak Brook, increased its exposure to international equity and real estate while trimming its allocations to domestic equity, fixed income and alternative investments under a new target asset allocation approved Thursday by the pension fund board.
The $41 billion pension fund raised international equity to 18% of assets from 16%, and real estate to 9% from 8%.
U.S. equity, fixed income and alternatives will each be reduced by a percentage point. Domestic equity is now 37%; fixed income, 28%; and alternatives, 7%. Its 1% cash allocation target was unchanged.
IMRF's actual allocation as of Oct. 31 was 43% U.S. equity, 27% fixed income, 21% international equity, 5% real estate, 3% alternatives and 1% cash. IMRF investment staff and Dhvani Shah, chief investment officer, have worked to boost the actual allocations to real estate and alternatives over the past few years, moving assets from its overall equity portfolio.
Callan, the pension fund's investment consultant, estimated the new targets would increase IMRF's expected 10-year rate of return to an annualized 6.33%, compared to 6.31% for the current target. The pension fund has an expected one year rate of return of 7.5%.
The new allocation went into effect Thursday following the board vote.