Ventura County (Calif.) Employees' Retirement Association increased its targets to domestic large-cap equities, private debt and private equity, and lowered targets to absolute-return fixed income and U.S. Treasuries following an asset-liability study.
The $7.1 billion pension fund's board approved the new targets at its meeting Monday, CIO Dan Gallagher said in an email.
The board increased targets to domestic large-cap equities to 23% from 22%, private equity to 16% from 15%, and private debt to 6% from 5%, and lowered the targets to absolute-return fixed income to 5% from 6% and U.S. Treasuries to 2% from 4%.
In a memo from Mr. Gallagher and investment consultant NEPC included with Monday board meeting materials, the changes were recommended to increase VCERA's expected 10-year portfolio rate of return to an annualized 6.4% from 6.2%. While the level of volatility is expected to increase as a result of the changes, the risk-adjusted performance as measured by the Sharpe ratio is expected to remain stable, the memo said.
The pension fund's other targets are expected to remain the same. They are 13% international developed equities; 10% global equity; 6% each core real estate and private real assets; 5% U.S. aggregate fixed income; 3% each domestic smidcap equities and emerging markets equities; and 2% non-core real estate.
As of March 31, the actual allocation was 29.3% domestic equities, 16% international equities, 13.5% domestic fixed income, 11.6% global equity, 11.4% private equity, 6.7% real assets, 6.1% real estate, 2.2% private debt, 2% overlay and 1.2% U.S. Treasuries.
Separately, the board on Monday approved a follow-on commitment of $15 million to Abbott Secondary Opportunities II, a secondary private equity fund managed by Abbott Capital Management. VCERA originally committed $25 million to the fund in January 2020.