City of Fresno pension to boost PE target

City of Fresno Retirement Systems will increase its target allocation to private equity over the next two fiscal years as it manages escalating exposure to the asset class.

Many retirement systems recently lowered their private equity pacing plans as they contend with slowing distributions and overexposure to the asset class. City of Fresno has taken an opposite approach as a way to keep its portfolio in balance.

According to a note from adviser NEPC included in board documents for the system’s March 28 board meeting, City of Fresno will increase its target to private equity to 5 percent for FY 2023 and 6.5 percent in FY 2024.

“Due to strong private equity performance and a pullback in public equity valuations, the plan’s current allocation to private equity is slightly above expectations for FY 2023,” NEPC wrote.

Buyouts reviewed the board documents.

The previous targets were 4 percent and 5 percent for each year. In 2021, City of Fresno approved an increase to its long-term target to private equity from 2 percent to 8 percent, according to NEPC.

The $3.5 billion system allocated 4.7 percent to private equity at the end of January 2023, according to NEPC.