Louisiana Teachers' Retirement System, Baton Rouge, is searching for its first multiasset credit fixed-income managers.
The $24.1 billion pension fund issued a solicitation for proposals for multiasset credit managers due to the creation of a new 4% target to the asset class, said Dana T. Brown, director of public markets, in an email.
The board at its June 2 meeting approved changes to its investment policy that included the new asset class, which falls within the overall fixed-income target of 14%. Mr. Brown said partial funding will come from reductions to the pension fund's emerging markets debt managers' portfolios, with the remaining funding to be determined.
According to the pension fund's updated investment policy, the board defines multiasset credit as "return-seeking fixed income that serves to diversify the primary return drivers of equity and risk-reducing fixed income assets" in order to "provide diversifying return sources that can generate higher relative yield."
Assets can include but are not limited to agency and non-agency mortgages, bank loans, emerging markets debt and high-yield debt, according to the policy.
Mr. Brown said the goal is eventually to reach that 4% target, or about $964 million. The SFP does not disclose how much is being allocated for this specific search.
The new multiasset credit portfolio has a benchmark of one-third Morningstar LSTA U.S. Leveraged Loan 100 index, one-third ICE BofA U.S. High Yield index and one-third J.P. Morgan GBI-EM Global Diversified index plus 80 basis points, according to the policy.
The SFP is available on the pension fund's website. Proposals are due at 4:30 p.m. CST on March 6. A selection is expected at the pension fund's June 1-2 board meeting.
