The board also approved increasing the targets to global equity to 40% from 30% and private equity to 24% from 22.5%, creating a new 2% target to cash and reducing the target to fixed income to 8% from 10%.
According to investment committee meeting materials, the expected compound return should be 6.7% with the strategic asset allocation changes. The current return is 6.3% with current target allocations.
Separately, according to the July 28 investment committee's webcast, the endowment returned a net 5% for the fiscal year ended June 30, and the $70 billion pension plan returned a net 1.7%.
The endowment's net return exceeded its policy benchmark of 2.9%, while the pension plan's net return fell below its policy benchmark of 3.1%.
For the three, five and 10 years ended June 30, the pension plan returned an annualized net 5.2%, 5.4% and 8.2%, respectively.
The pension plan returned a net 6% for the fiscal year ended June 30, 2019.
By asset class, the pension plan's top performer was private equity, which returned a net 9.3% (above the policy benchmark of 8.5%), followed by real assets at a net 5.5% (benchmark to be determined).
Other asset class returns were: fixed income, which returned a net 5.3% for the fiscal year (below the policy benchmark of 7%); public equities, which returned a net 3.3% (above the 1.2% policy benchmark); real estate, -1.6% (3.9%); and absolute return, -2.4% (-0.1%).
As of June 30, the pension plan's actual allocation was: 56.8% global equities, 20.5% fixed income, 6.7% private equity, 6.4% absolute return, 6.1% real estate, 3.1% real assets and 0.4% cash.
The endowment's annualized net returns for the three, five and 10 years ended June 30 were 7.4%, 6.6% and 8.9%, respectively.
For the fiscal year ended June 30, 2019, the endowment returned a net 8.2%.
The best-performing asset class for the fiscal year ended June 30 was private equity, which returned a net 21.9% (above the policy benchmark of 8.5%), followed by real assets at a net 9.2% (benchmark to be determined).
Other asset class returns were: Fixed income, with a net 5.8% (above the policy benchmark of 1.2%); global equities, 5.8% (1.2%); real estate, zero (3.9%); and absolute return, -1.4%.
As of March 31, the endowment's actual allocation was: 42.8% global equity, 22.2% absolute return, 16.8% private equity, 7.2% real estate, 5% real assets, 4% fixed income, and 2% cash.
UC Investments oversees a $130.2 billion investment portfolio, including the University of California's pension plan, general endowment pool and $26.9 billion defined contribution plan.