- Now targets 15 percent for private equity
- $2 bln pension fund ups allocation to global tactical assets
- Move seen as a way to boost liquidity
The nine-member board for the pension fund has OK’d a 5 percentage point target allocation increase to its Global Tactical Assets Allocation, or GTAA, to a total of 35 percent. The GTAA program, managed by J.P. Morgan Chase & Co and GMO LLC, is earmarked for equities and other assets available for more rapid monetization than a private equity fund, which typically has a cycle of about 10 years.
“Increasing our allocation to GTAA helps our portfolio adapt more quickly to market changes and provides for greater liquidity,” Terry Slattery, executive director of the Municipal Fire & Police Retirement System of Iowa, said in an email to Buyouts. The pension system needs greater liquidity to handle current obligations, he said.
Current holdings in private equity are at 18 percent of the fund, so the decision by the board to trim its allocation will reduce future commitments to private equity investments, he said.
All told, the fund’s overall target asset allocation now stand at 40 percent core, mostly stocks and bonds; 35 percent GTAA; 15 percent private equity; and 10 percent real estate.
On its next move into private equity, Summit Strategies was scheduled to make a presentation to the pension system’s board on Jan. 9 to lay out the amount of future commitments the system will need to make in line with its new 15 percent target.