Arkansas Public Employees' Retirement System, Little Rock, is looking to commit a total of up to $575 million to private equity fund-of-funds managers in 2023 after creating a new 5% target allocation to the asset class.
The $10 billion pension fund's board at its meeting on Wednesday approved the creation of the new target following an asset allocation study by investment consultant Callan, said Linda McGrath, administrative specialist, in an email.
The board also approved increases to the targets to domestic equities to 36% from 33% and fixed income to 21% from 18% and decreases to the targets for international equities to 17% from 24%, diversified strategies to 2% from 5% and convertible bonds to 3% from 4%.
The target to real assets remains unchanged at 16%.
The pension fund's investment staff with the assistance of Callan will look to allocate about 75% of the private equity allocations to secondary private equity funds of funds and 25% to primary private equity funds of funds. The search for secondary funds will commence first, according to Callan's presentation included with board meeting materials.
For 2023, Callan's pacing plan calls for committing up to $500 million to secondary funds and $75 million to primary funds and reaching the full target of 5% by 2032.
As of Dec. 31, the actual allocation was 36.9% domestic equities, 24.6% international equities, 18.3% fixed income, 15.3% real assets and the rest in diversified strategies.