Ohio Public Employees’ Retirement System, Columbus, approved long-term target allocation changes for its $102.4 billion defined benefit plan including an increase in risk mitigating strategies and private credit and decreases in core and high-yield fixed income.
The system’s board approved the changes at its Nov. 19 meeting, said spokesman Michael Pramik.
The changes are the result of an asset-liability study conducted by investment staff and investment consultant Meketa Investment Group.
Among the changes is an increase in the overall target to risk mitigating strategies to 10% from 1%. Within that 10% target are newly created targets of 3.4% and 3.3%, respectively, of the total DB plan to long Treasuries and trend following strategies and an increase to alternative risk premia to 3.3% from 1%.
The board also approved an increase in the target to core private real estate to 8% from 7.8%, private credit to 4% from 1% and decreases in the targets to domestic equities to 21% from 22%, core fixed income to 5% from 9%, non-core real estate to 4% from 4.2%, high yield to 2% from 4%, Treasuries to 2% from 3%, investment-grade corporate fixed income and Treasury inflation-protected securities to 2% each from 3% each and gold and risk parity to 1% each from 2% each.
Targets remaining unchanged are 20% international equities, 15% private equity and 1% each commodities, emerging markets debt and securitized debt.
Paul Greff, chief investment officer, said in a Nov. 12 memo to the board that staff and Meketa recommended the new long-term target allocation because pension assets must keep growing with the funding ratio at 79%, but the growth needs to be “accompanied by a stabilizing allocation to risk-mitigating strategies to reduce the volatility associated with traditional growth assets like global equities.”
He said in the memo the new targets will offer a “higher expected return, a lower risk profile and a significant allocation to RMS compared to the current DB allocation.”
Pramik could not be immediately reached for recent actual allocation information.
