Orange County Employees Retirement System (OCERS) has adopted a new asset allocation policy, which includes lowering its credit allocation from 14 percent to 13 percent, the pension fund said on Thursday.
The plan’s investment committee approved the changes to the credit asset allocation policy during their monthly meeting on Wednesday, according to the pension’s newsletter.
Along with the change to its credit allocation, OCERS eliminated its absolute return allocations. That strategy targeted investments in equities, bonds, currencies, inflation-linked bonds and emerging markets and had a 14 percent allocation target, according to the fund’s investment policy statement.
The investment committee also approved an increase in the fund’s core fixed-income allocation from 13 percent to 17 percent, real assets from 18 percent to 22 percent, and its private equity allocation from 6 percent to 8 percent.
OCERS’ new asset allocation policy has an expected return of 7.8 percent with a projected standard deviation of 13 percent. The fund increased risk mitigation from 0 percent to 5 percent.
The fund was not immediately available to comment.
At the meeting last week, the investment committee also heard the latest performance data from the fund’s annual report. OCERS recorded a one-year return of 8.25 percent for 2016, with investment gains of $1.1 billion for the year, according to the newsletter. As of 31 December 2016, OCERS’ total fund had more than $13.2 billion in assets.
In the last two years, the pension has made commitments to Kayne Anderson Real Estate Debt ($125 million), Monroe Capital Private Credit Fund II ($70 million), and Alcentra European Direct Lending Fund II ($110 million), according to PDI data.
Orange County Employees Retirement System have invested into private debt globally through subordinated/mezzanine, unitranche, senior debt, subordinated/mezzanine debt and senior debt.