Last week North Dakota staff updated the board on the restructuring of the fixed income portfolio. They are considering several alternative credit strategies including bank loans, structured credit, direct lending and distressed debt. Staff will be proposing a barbell structure “explicitly segmenting the fixed income manager structure based on liquidity, quality and expected return potential: 1) An anchor of low risk, high quality, highly liquid traditional fixed income beta exposures on one end… 2) Complemented by moderate risk, less liquid, higher return potential alternative credit strategies for greater diversification and differentiated sources of return enhancement.” At the same meeting, the investment policy statement was updated to increase equity and fixed income allocation by 1% each, real assets and cash were reduced.
Washington State Board recently held their annual strategic planning session. Staff is proceeding with the board guided initiative of expanding the availability of private assets to the other funds managed by WSIB, The Labor & Industries insurance fund is considering adding private real estate. Alternatives are also being considered for the retirement strategy funds, management of the retirement strategy funds currently by AB, is going to be rebid.
For East Bay Metropolitan Utilities District, PCA provided a review of passive ESG investing options. PCA outlined the expansion of ESG benchmarks in the last ten, particularly for those focused on the E or Environment. Among the three major benchmark providers FTSE/Russell, MSCI and S&P, in 2005 there were zero environmental benchmarks, currently there are 17. The report highlighted the portfolio characteristics, top holding and sector weightings among the major environmental indexes. At the same meeting, staff shared their comment letter to the SEC regarding ESG disclosure.
Several research presentations added last week, including from the Washington strategic planning session: The Best of Time or the Worst of Times in PE/VC, KKR 2016 Mid Year Macro Update, by State Street Climate Change Risk Oversight Framework and Asset Stewardship — Role of Corporate Governance in Investing. Nebraska held a manager roundtable discussion “Fixed Income Investing in Today’s Economy” presentations from manager one, manager two, manager three. San Luis Obispo held a real assets board education session.