The San Francisco CIO report from last week’s meeting outlined their action plans to: reduce risk, increase diversification and increase alpha. Reduce risk action plans include potential investments in low volatility equity, reducing long-only equity, tail risk hedging and implementation of an absolute return program. Increase diversification will be achieved with increased allocation to treasuries, real assets and private debt. Lastly, top priorities for increasing alpha are: private debt, Asia private equity, health care/biotech equity, MLP’s, factor tilts.
South Carolina with AonHewitt established new long term asset allocation policy targets. Notable changes include increased equity allocation, decrease in short duration fixed income, considerable reduction in opportunistic (GTAA, hedge funds), an increase in private real estate and an elimination of commodities allocation. AonHewitt presented a two year glide path to achieve the long term policy targets. Potential new mandates for the current fiscal year include 5% allocation to equity options strategies and initiating an infrastructure allocation. At the same meeting, the board considered staff review of active vs. passive equity.
Research presentations added last week, include The Future of Financial Services by the World Economic Forum to be presented at today’s CalPERS annual board retreat. Hawaii staff provided board education on Behavorial Finance. For Ventura County an international equity manager client presentation featured Brexit What’s Next see page 25.