Los Angeles Water & Power Employees' Retirement Plan will search for a passive short-duration U.S. Treasury inflation-protected securities manager to run about $385 million, CIO Jeremy Wolfson said in an email.
The $14.3 billion retirement plan's board at its March 13 meeting approved the RFP after voting to restructure its $550 million real-return portfolio. Within that portfolio, which has a 5% target of the total plan, the board voted to add a 70% target to passive short-duration U.S. Treasury inflation-protected securities, effectively replacing the 64% target to active global inflation-linked securities because it is a "better inflation hedge with lower interest rate sensitivity," according to a March 6 memo to the board from Linda P. Le, retirement plan manager.
Mr. Wolfson said a timeline has yet to be determined since staff currently has other RFPs in progress. Western Asset Management Co., which runs $389 million in the global inflation-linked securities portfolio, will be invited to bid for the new portfolio. The retirement plan posts RFPs on its website.
Also within the real-return portfolio, the board voted to eliminate the 12% target to timber because its investments with Molpus Woodlands Group and Hancock Timber Resource Group, which run $18 million and $13 million, respectively, will "wind down in the foreseeable future," a memo to the board said.
The board also approved increasing the target to commodities within the real return portfolio to 30% from 24%. Current manager Invesco runs $124 million, which equates to about 30% of the portfolio.
Investment consultant RVK is assisting.