Illinois Municipality revamps asset allocation and posts 16.6% return for the year

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Illinois municipal pension fund Oak Brook has approved changes to the pension fund’s target allocation and its minority investment management objectives.

The board of the $56.8 billion pension fund at its February 11 meeting approved the changes following an asset allocation review, according to a press release emailed by spokesman John Krupa.

The changes include increases to fixed income and international equity targets to 25.5% and 18%, respectively, from 25% and 15% respectively.

The board also approved lowering the domestic equity and alternative investment targets to 35.5% and 9.5%, respectively, from 39% and 10%, respectively.

In addition, the board approved the change of the real estate asset class to private real estate, with its target changing from 10% to 10.5%, and the cash target remaining at 1%.

As of September 30, the actual allocation was 43.4% domestic equities, 22.3% fixed income securities, 18.6% international equities, 8.4% alternative investments, 6.6% real estate and the rest in cash equivalents.

Finally, the board approved increases to its minority investment manager targets for fixed income at 35% of the asset class from 32% and private equity at 25% from 22%, and also approved a recommendation allowing staff to accept co-investment opportunities upon CIO Angela Miller-May’s approval.

In addition, the pension fund reported a net return of 16.6% for the year ended December 31.

IMRF’s net return significantly exceeded the benchmark return of 13.5% for the period, according to a performance report on its website.

For the three, five and 10 years ended Dec. 31, IMRF posted an annualized net return of 17%, 12.1% and 10.7%, respectively, above the respective benchmarks of 15.1%, 11, 1% and 9.9%.

The pension fund had generated a net return of 14.8% for the year ended December 31, 2020.

For the most recent year ended Dec. 31, the best-performing asset class was Alternatives, which returned a net return of 46.4% (above the combined Benchmark Alternatives Index). 9%), followed by domestic equities with a net return of 24.7% (below its benchmark index of 25.7%); real estate, a net 22% (above its benchmark of 21.9%); international equities, 9.4% (7.8%); and fixed income, -0.5% (-1.6%).

Information on the actual allocation as of December 31 was not yet available.

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