California County establishes private debt allocation

 The Ventura County (Calif.) Employees Retirement Association is starting a maiden 5 percent allocation to private debt.  

Trustees of the $4.4 billion Ventura County (Calif.) Employees Retirement Association have approved new 5 percent allocation to private debt, or about $220 million of its assets, at a board meeting on 23 February. This allocation change, among others, was recommended to the board by the pension’s general consultant NEPC.

The consulting firm recommended that the pension add the private debt allocation as an “opportunity to generate equity-like returns with significantly less volatility,” said a presentation from NEPC to the Ventura County board on 23 February. The portfolio will be benchmarked to the S&P/LSTA Leveraged Loan Index + 2 percent, though the benchmark is subject to change depending on the private debt managers selected.

The pension plan is dropping its public fixed-income allocation to 14 percent from 24 percent, meanwhile. Other recommended changes, all of which were approved, included dropping public equities to 49 percent from 54 percent, while creating a new 10 percent bucket for “global asset allocation” strategies, which are usually broad “go-anywhere” type strategies managed by hedge funds and other alternative investment firms.

Allan Martin, a partner at NEPC’s Redwood City, California office, is the field consultant to the pension plan and has been working with other institutional investors to raise or build private debt allocations. The $34 billion Arizona State Retirement System, another client of NEPC’s and Martin’s, also recently approved raising its private debt target to 10 percent from 3 percent. NEPC will be assisting both pension plans with scouting for managers. Neil Sheth, director of alternative assets research at NEPC’s Boston headquarters, oversees private debt manager research at the consulting firm.

The Ventura County Association is also in the process of selecting its first chief investment officer, according to a statement on executive search firm CPS HR’s website, which is conducting the search. “The Ventura County Employees Retirement Association is seeking a chief investment officer to serve as the in-house investment expert and act as a liaison to the board’s investment consultant and investment managers providing independent analysis of their investment proposals; administer, monitor and evaluate the investment program, including asset allocation, and rebalancing under the authority of the board; and plan and develop investment strategies,” said the post. Applications were due on 26 January and the salary cap was set at $158,260.