San Luis Obispo County (Calif.) Pension Trust will search for a private markets consultant in the next year or two following the approval of a new asset allocation that triples its combined exposure to private credit and private equity.
The $1.5 billion pension fund's board approved the allocation, recommended by investment consultant Verus Advisory, at its Sept. 28 meeting, Executive Director Carl Nelson said.
The new allocation includes increasing the targets to private equity and private credit to 18% and 12%, respectively, from 5% each, and reducing the targets to public equities to 30% from 42% and real assets to 15% from 17%.
Also within real assets, the targets to core real estate and value-added real estate will fall to 5% of the total fund each from 16% and 11%, respectively, and a new target of 5% of the total fund was created for global infrastructure.
The new allocation also creates new targets of 8% to long-duration U.S. Treasuries, 7% to U.S. Treasury inflation-protected securities, 6% to short-duration government/investment-grade credit and 4% to cash equivalents. It also eliminates targets of 15% to domestic core fixed income, 6% to bank loans, and 5% each to investment-grade credit and emerging markets debt.
Mr. Nelson said the significant increase to private credit and private equity will require the hiring of a dedicated consultant for the asset classes. There is no timeline for the issuance of an RFP; he said the process of reaching the new targets will take several years.
As of Aug. 31, the pension fund's actual allocation was: 22.6% international equities; 22.1% domestic equities; 18.5% domestic fixed income; 14% real estate; 8.9% global fixed income; 4.3% private credit; 4.1% private equity; 2.7% cash; 1.6% commodities; and the rest in opportunistic strategies.