South Carolina Retirement System Investment Commission's investment staff will “simplify” the equity portfolio and broaden investment parameters for fixed-income managers they oversee for the state's $27.3 billion pension fund.
Simplification within the equity portfolio will include reducing the number of managers and increasing the size of each remaining manager's allocation, said Hershel Harper Jr., the commission's chief investment officer, while the fund's current fixed-income managers might be given broader investment mandates to allow them to make more opportunistic investments.
A new asset allocation kicks in on July 1, the beginning of the Columbia-based South Carolina Retirement Systems' fiscal year, and includes a global equity asset class with a 40% target that will be created by combining U.S. and international equity and private equity allocations that total 38.5%.
Searches for global equity managers are possible under the new allocation, Mr. Harper said.
The restructuring of the retirement system's equity portfolio includes moving management of the domestic equity portfolio in-house, Mr. Harper said. The current target allocation to U.S. small- and large-cap equities is 14% of plan assets.
The commission is seeking a legislative appropriation to fund new investment infrastructure and to hire portfolio managers, Mr. Harper said.
Investment commission staffers now manage the retirement system's short-duration securities and cash allocations internally, with target allocations of 3% and 2%, respectively.
The domestic equity program will be the first large-scale move to internal management, Mr. Harper said. The plan is to start managing U.S. equity in enhanced index strategies and once “proof of concept” is successfully established, to move to active management, he said.
Over time, international equity — now with a 16% target allocation — likely also will be brought into internal management, Mr. Harper said.