Kansas City (Mo.) Police Retirement System and Civilian Employees' Retirement System of the Police Department of Kansas City committed a total of $72 million to White Oak Fixed Income Fund, a direct lending fund managed by White Oak Advisors, said James Pyle, pension systems manager.
The $880 million Police Retirement System committed $62 million and the $142 million Civilian Employees' Retirement System committed $10 million to the fund. The commitments are the result of increasing the pension funds' target allocations to 7% from 5% and terminating Fidelity Investments from its $6 million strategic real return portfolio.
Mr. Pyle said the board felt that returns in direct lending could be better than returns in real return/commodities strategies. He noted there were no performance issues with the Fidelity strategy.
Funding for the higher target comes from the winding down of the pension funds' allocation to private equity. The target is 2%. The pension funds committed to private equity funds managed by Abbott Capital Management and J.P. Morgan Asset Management in 2005 and 2006; RVK recommended letting those funds wind down, eliminating the private equity target. The target was reduced to 2% from 5% earlier in 2017.
Other targets, which are identical in both pension funds, are: 37% global equities, 30% fixed income, 15% absolute return and 11% real estate.
As of Dec. 31, the police retirement system's actual allocation was: 40.6% global equities, 26.6% fixed income, 14.2% absolute return, 13.3% real estate, 3.4% real return and 1.9% private equity.
As of the same date, the civilian retirement system's actual allocation was: 41.3% global equities, 27.4% fixed income, 14% absolute return, 12% real estate, 3.9% real return and 1.4% private equity.