The Vermont Pension Investment Commission, Montpelier — the overseer of Vermont's three largest pension plans with roughly $5.7 billion in assets — approved a new target asset allocation that slightly increases the plans' exposure to indexed global equities, core real estate and infrastructure, according to Andy Cook, an investment analyst with the Vermont State Treasurer's Office.
The decision to adjust the asset allocation was made at a VPIC meeting on June 27, Mr. Cook said.
To accommodate the increased allocations, VPIC approved lowering targeted allocations to emerging market debt and Treasury Inflation Protection Securities to 2% from 4% and 3%, respectively.
VPIC's CIO Eric Henry felt that the risk/return profile of emerging market debt was "less compelling than other growth assets in which the allocation sits" and that there were "more versatile inflation hedges available in the market" than TIPs, he said in a report that was part of VPIC's meeting materials.
The reductions in the two asset classes allowed modest allocation increases to indexed global equities, core real estate and infrastructure. The targeted allocation to global equity increased to 44% from 43%, while allocations to core real estate and private core infrastructure rose one percentage point to 4% and 3%, respectively.
Mr. Henry referred to the recommended changes as "small tweaks to fine-tune our implementation of the strategic asset allocation."
"The proposed increase in core real estate and infrastructure would allow us to consider triple net lease and other investment strategies that, we believe, would be effective inflation hedges during inflationary periods, but not a performance drag during noninflationary periods," he said.
