Ventura County Employees Adjust Target Allocations After Asset-Liability Study
The Ventura County (Calif.) Employee Pension Association increased its targets for large cap national stocks, private debt and private equity, and lowered targets for absolute return fixed income and US Treasuries following an asset-liability study.
The board of directors of the $ 7.1 billion pension fund approved the new goals at its meeting on Monday, CIO Dan Gallagher said in an email.
The board increased targets for national large-cap stocks to 23% from 22%, private equity to 16% from 15%, and private debt to 6% from 5%, and lowered targets from fixed income to 5% absolute return is 6% and 2% US Treasuries are 4%.
In a note from Mr. Gallagher and investment consultant NEPC Included with the Monday board meeting documents, the changes were recommended to increase the rate of return on VCERA’s expected 10-year portfolio to an annualized rate of 6.4% from 6.2%. While the level of volatility is expected to increase due to the changes, risk-adjusted performance as measured by the Sharpe ratio is expected to remain stable, the note says.
The other objectives of the pension fund should remain the same. These are 13% of international actions developed; 10% global equities; 6% each of basic real estate assets and private real estate assets; 5% US global fixed income; 3% each of small domestic stocks and emerging market stocks; and 2% of non-strategic real estate.
As of March 31, the actual allocation was 29.3% domestic equities, 16% international equities, 13.5% domestic fixed income, 11.6% global equities, 11.4% Private Equity, 6.7% Real Assets, 6.1% Real Estate, 2.2% Private Debt, 2% Overlay, and 1.2% US Treasuries.
Separately, the board on Monday approved a follow-up commitment of $ 15 million to Abbott Secondary Opportunities II, a secondary private equity fund managed by Abbott Capital Management. VCERA initially committed $ 25 million to the fund in January 2020.