Los Angeles Water & Power Employees' Retirement Plan added a new dedicated target to private credit as part of a restructuring of its overall fixed-income allocation.
The $15.6 billion retirement plan, which includes $13.3 billion in defined benefit plan assets, added the target following a periodic fixed-income structure review conducted by staff and investment consultant RVK.
The overall target to fixed income in both the DB plan and retiree health plan is 25.5%. The structure change creates a target to private credit of 10% of the fixed income allocation, while the target to extended global credit was reduced to 35% of the fixed income allocation from 45%. The targets remain unchanged to principal protection assets and U.S. bank loans, at 50% and 5% of the fixed income allocation, respectively.
The board approved the changes at its Oct. 28 meeting, according to a notice of the approved resolution on the plan's website.
According to a presentation from RVK, private credit was recommended because it has the "potential to provide a higher level of risk-adjusted return relative to the more liquid fixed income assets."
Jeremy Wolfson, chief investment officer, was not available to provide further information.