The Los Angeles County Employees Retirement Association board voted to launch an RFP for managers to run a new $3.5 billion long-term U.S. Treasury portfolio, said CIO Jonathan Grabel in an email.
The new long-term bond portfolio will be a passively managed separate account for the $72 billion Pasadena, Calif., pension fund. The board added the new 5% allocation to its $15 billion risk reduction and mitigation asset class in May.
LACERA officials expect to evaluate contenders in the first quarter of 2022, with a selection anticipated in the second quarter. The RFP will be posted on the pension fund's website.
LACERA's general investment consultant Meketa is assisting.
The board on Wednesday also approved structural changes to its risk reduction and mitigation asset class, adopting a target mix of 70% passive and 30% active strategies. At the same time, the board made changes to the investment-grade bond category within that asset class, formally terminating core-plus mandates that were liquidated earlier this year. Core bonds now make up the entire investment-grade portfolio. LACERA has a target allocation of 7% of its risk reduction and mitigation asset class to investment-grade bonds.
LACERA also increased its target for the emerging manager hedge fund program within the risk reduction and mitigation asset class to 15% from 9%. In May, the system increased its hedge fund allocation to 6% from 4% in that asset class.