Kentucky Retirement Systems, Frankfort, will make changes to the target allocations of the five pension funds it oversees, including increases to public equities for all funds.
The systems' investment committee approved the changes at its remote meeting Wednesday as a result of an asset allocation study conducted by investment consultant Wilshire Associates, a video of the meeting shows.
The $7.3 billion County Employees Retirement System (Non-Hazardous), $2.5 billion County Employees Retirement System (Hazardous) and $729 million Kentucky Employees Retirement System (Hazardous) share a common target allocation based on their assumed rates of return of 6.25%.
The investment committee approved increasing the targets in those plans to domestic equities and international equities to 21.75% each from 18.75% each, real estate to 10% from 5%, and cash to 1.5% from 1%; and reducing core fixed income to 10% from 13.5%, opportunistic/absolute return to zero from 3%, and real return to 10% from 15%.
Targets that will remain unchanged are 15% high yield/specialty credit and 10% private equity.
The $2.5 billion Kentucky Employees Retirement System (Non-Hazardous) and $299 million State Police Retirement System share a target allocation based on their assumed rates of return of 5.25%.
The investment committee approved increasing the targets to domestic equities and international equities to 16.25% each from 15.75% each, real estate to 10% from 5% and cash to 5% from 3%; and reducing real return to 10% from 15% and opportunistic/absolute return to zero from 3%.
Targets that will remain unchanged are: 20.5% core fixed income; 15% high yield/specialty credit; and 7% private equity.
Whether any managers will be terminated was not known. All of KRS' holdings in absolute-return funds specifically are in redemption status.
As of Sept. 30, the actual allocation of CERS (Non-Hazardous) was 20.7% domestic equities, 20.6% international equities, 17.8% core fixed income, 15.7% high yield/specialty credit, 8.4% private equity, 5.7% real return, 5.4% real estate, 3.8% opportunistic/absolute return and 1.9% cash.
Also as of Sept. 30, the actual allocation of CERS (Hazardous) was 21% domestic equities, 20.2% international equities, 18.1% core fixed income, 15.5% high yield/specialty credit, 8.4% private equity, 5.7% real return, 5.1% real estate, 3.6% opportunistic/absolute return and 2.4% cash.
The actual allocation to KERS (Non-Hazardous) as of Sept. 30 was 24.3% core fixed income, 16.9% domestic equities, 16.2% international equities, 15% high yield/specialty credit, 7.3% private equity, 6% cash, 5.6% real return, 5.1% real estate and 3.6% opportunistic/absolute return.
The actual allocation to KERS (Hazardous) as of Sept. 30 was 21.2% domestic equities, 20% international equities, 18.8% core fixed income, 15.6% high yield/specialty credit, 7.8% private equity, 5.6% real return, 4.9% real estate, 3.4% opportunistic/absolute return and 2.7% cash.
As of Sept. 30, the actual allocation to SPRS was 25.2% core fixed income, 18.3% domestic equities, 16.2% international equities, 15.3% high yield/specialty credit, 5.8% private equity, 5.6% real return, 5.2% cash, 5% real estate and 3.4% opportunistic/absolute return.
