U.S. Public Plan Asset Allocation Report

Released August 2022

Asset allocation information affords allocators the opportunity to compare their investments to U.S. public plan peers’. The data can be used to benchmark against U.S. DB strategic targets, review alternative portfolio construction concepts, and understand how U.S. public plans are viewing certain investments within a portfolio context. To aid in these efforts, we analyze how strategic asset allocations have changed over time and how asset allocations differ between plans of various asset sizes.

For asset managers, asset allocation data can illuminate areas of demand for specific strategies and show whether a product market may be underserved or approaching saturation – what we like to think are early signals for activity. The following report also covers mandate information which highlights how Market Lens can show the most immediate needs of allocators and can prove invaluable for investor relations and business development teams.

The information in this report is based on U.S. public plan documents sourced from eVestment Market Lens. We used asset allocation disclosures provided by 228 U.S. plans managing assets of $4.0 trillion as of Q4 2021.

Highlights
  • Public plans’ public equity exposure averaged 44.3% and were neutral-weight against their target allocations through 2021. The rise in private alternatives allocations have come at the expense of public equity allocations, with the latter decreasing every year since 2017 (cumulative total of -4.5pp).
  • The number of commitments made and the dollars committed to private equity and private debt continued to rise into 2022. However, Market Lens documents indicate that public plans were over-allocated to private equity and only moderately underallocated to private debt as of year-end 2021.
  • U.S. public plans were under-allocated to real assets by -125 bps against their target allocations of 13.1% through 2021. Real estate equity and debt represented the bulk of the under-allocation, but infrastructure and blended real assets strategies also require significant additional capital to reach their strategic targets. Dedicated natural resources allocations were the only over-allocated real assets sub-category.
  • Hedge funds were under-allocated by -10 bps and multi-asset strategies over-allocated by +2 bps through 2021. As with public equities, these asset classes have seen their target allocations decline over time. However, we saw a surge in the number of commitments made to both asset classes measuring +$3.1 billion and +$1.3 billion in Q1 2022, respectively.
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