Los Angeles City Employees’ Retirement System will likely launch searches for infrastructure and international equity managers in the summer and/or fall of 2025.
The $24.1 billion pension fund’s investment consultant NEPC included the likely searches in an asset allocation implementation work plan presented at its April 22 board meeting.
The board will consider issuing RFPs to implement a new asset allocation approved in December as the result of an asset-liability study. According to the presentation included with meeting materials, LACERS staff will work with NEPC throughout the spring to outline the scope of manager searches required to carry out the new allocation.
The presentation said searches for infrastructure managers and international equity managers will likely occur in the summer and fall. Notable among the changes approved in December was the creation of a new 5% target to infrastructure, as well as changes to targets within international equities that will require structural changes to that portfolio.
Those changes included eliminating the 3% and 1.3% targets to international developed markets small-cap equities and emerging markets small-cap equities, respectively, lowering the target to international developed markets equities to 13% from 15%, and slightly increasing the target to emerging markets equities to 7% from 6.7%.
Timelines for the searches are pending approval by the board in upcoming meetings.
Other asset allocation changes were increasing the targets to domestic large-cap equities to 17% from 15%, U.S. high-yield corporate bonds and U.S. leverage loans to 2% each from 1.5% each and lowering U.S. aggregate bonds to 10.3% from 11.3%, and emerging markets external debt and emerging markets local currency debt to 1.5% each from 2% each.
Targets that remain unchanged are 16% private equity, 6% domestic smidcap equities, 5.8% private debt, 4.2% core real estate, 3.6% U.S. Treasury inflation-protected securities, 2.8% noncore real estate, 1.4% real estate investment trusts and 1% cash.
Totals do not equal 100% due to rounding.
NEPC also said in the presentation they will recommend interim policy targets due to the slower pace of building out private markets allocations.
As of Dec. 31, the actual allocation was 24.3% international equities, 22% domestic equities, 18.8% private equity, 13% core fixed income, 11.4% real assets, 9.7% opportunistic credit and the rest in cash.
