North Carolina Retirement Systems, Raleigh, is tapping its $10 billion cash reserve to take advantage of investment opportunities during the current market downturn, said Dale R. Folwell, state treasurer and the $100 billion system's sole trustee, in an interview.
Mr. Folwell said investment teams in the retirement division of the treasurer's office are focusing on buying and selling investment-grade corporate bonds within the retirement system's core fixed-income portfolio and also are adding to U.S. equities through an internally managed index fund.
Also of interest are bank loans, which are seeing spreads "explode," Mr. Folwell said. Investment officers still are considering increased investment in this credit asset class and, if they move forward, likely will top up investments with existing managers, he said.
Mr. Folwell said the changes the retirement system is "making on the edges" demonstrate the focus the investment staff has on "retaining the conservative nature of the pension fund."
The asset allocation of the defined benefit plan is 33% investment-grade bonds, 28% equities, 10% cash, 9% public and private real estate, 8% inflation hedge/multistrategy, 6% each opportunistic fixed income and private equity.
Mr. Folwell said many employees involved in running the pension fund are working remotely, but added that investment teams that run internally managed portfolios are in their offices so they can trade.
Mr. Folwell said the retirement division of the treasurer's office is staying in touch with plan beneficiaries about the actions the investment team is taking to manage the portfolio in turbulent market conditions.
"The last thing a teacher or a policeman needs to worry about when they leave the house in the morning is the safety of their retirement assets," Mr. Folwell said.