The Texas Employees Retirement System, Austin, approved moderate asset allocation changes to the $33 billion defined-benefit plan at an Aug. 24 meeting in response to the system’s asset-liability study.
The system’s new investment policy statement, which includes asset allocation, will come into effect on September 1, spokeswoman Mary Jane Wardlow said in an email.
The biggest change was a 3 percentage point increase in the private equity allocation to a long-term target of 16% from 13%, according to a report from the meeting. The private equity portfolio totaled $6.5 billion as of June 30, with an actual allocation of 19.7%.
The target for the $3.7 billion fixed income portfolio has been reduced from 11% to 12%.
The system’s overall private credit target will remain at 3% of plan assets, while the overall public credit portfolio target will be reduced to 9% from 8%.
The target allocated to the $1.6 billion hedge fund portfolio was increased from 5% to 6%.
The largest asset allocation reductions were the lowering of the target allocation of the $10.9 billion public equity portfolio to 35% from 37% and the infrastructure portfolio from $1.7 billion dollars to 5% from 7%.
The target cash allocation was lowered from 2% to 1%, and the system’s $361 million special situations portfolio, which had a target of 1%, is being phased out, according to the report.
The asset class targets that were not changed in the new allocation applied to public real estate at 3% and private real estate at 9%.
The report says the target changes “will shift confidence from an 83% risk assets target to 80%, a somewhat more conservative stance that would align more closely with growth-oriented institutional peers.” .