San Diego County Employees Retirement Association adopted a new asset allocation target that includes increasing total equity investments by 5 percentage points to 50% and cuts alternative investments by 4 percentage points.
The board boosted global equities to 8% from 3% and U.S. equities to 22% from 20%, and reduced non-U.S. Equity emerging target to 5% from 7%. Risk-reducing fixed income increased to 19% to 18% and opportunistic portfolio target dropped to 6% from 8%. In alternative investments, real estate increased to 10% from 9%, private equity dropped to 6% from 8% and private real assets decreased to 3% from 6%.
Stephen C. Sexauer, CIO of the $11.9 billion fund, said during the board's June 18 meeting that the changes, which included increasing its real estate allocation, were part of the pension plans strategy to invest in private assets only when SDCERA officials can underwrite outperformance.
"If you can't beat the market, quit doing it," he said.
Mr. Sexauer also said that the fund was reducing hedge funds and zero-correlated assets to 1.8% from 5% of the opportunistic portfolio.
"We're going from complicated higher fee assets to a 70%/30% fund," he said.