Sacramento County (Calif.) Employees' Retirement System will search for at least one active global equity manager to run about $250 million.
The $12.8 billion pension fund's board approved the search at its Dec. 8 meeting as part of the restructuring of its overall global equity portfolio, recently released meeting minutes show.
The restructuring was the result of the board's earlier decision to adopt a 40% target allocation to global equity. Previously, the retirement system had separate target allocations of 20% each to domestic equities and international equities.
The allocation within the new target is now 20% domestic equities, 16% international equities and 4% global/unconstrained equities, according to a presentation included with Dec. 8 meeting materials.
Staff and investment consultant Verus Advisory recommended the new target to global/unconstrained equities to give the pension fund the opportunity to add managers who might invest in both domestic and international equities. The new target adds "flexibility in the asset allocation, allowing SCERS to invest in a broader range of strategies that have the ability to potentially excess returns above the broad public equity benchmark (MSCI ACWI investable market index)," according to the presentation.
About 50% of the global equity target will consist of strategies with the flexibility to allocate across a wide range of global equity markets, and the board approved a search for these strategies. The board will hire one or more managers. A timeline for the search was not provided.
Verus Advisory will assist with the search.
According to the presentation, the other half of the global/unconstrained equity target could potentially consist of unconstrained strategies such as sector specialist strategies, country-specific strategies or long/short equity strategies of sector specialist strategies.
As of Sept. 30, the actual allocations to international equities and domestic equities were 19.5% and 19.3%, respectively.
Steve Davis, the pension fund's chief investment officer, did not respond to requests for further information.