The Supplemental Retirement Board of Portsmouth, Virginia, outlined a strategic investment plan during its meeting on August 3, 2023, aiming to align with its target asset allocation of 70% equities, 22% bonds, and 8% alternatives. Currently, the board is slightly overweight in alternatives but underweight in stocks by approximately 3 to 4 percentage points, a cautious stance attributed to concerns over corporate earnings.

The board anticipates reaching its target allocation by the end of 2023, with a methodical approach to adjusting investments over the next few months. This strategy is influenced by evolving market conditions, including a significant reduction in inflation and the Federal Reserve nearing the end of its rate-hiking cycle. The board noted that the market is pricing in potential rate cuts in 2024, which could support equity prices.

In response to questions about cash reserves, the board clarified that the cash is primarily in cash equivalents, such as treasury bills, and is expected to earn competitive interest rates while awaiting beneficiary payments. The board emphasized that their cautious approach does not signify a retreat from the market but rather a strategic positioning to capitalize on anticipated market changes.

As the board prepares for potential market fluctuations, including a hoped-for correction that could allow for increased equity investments, they remain committed to their investment policy goals. The discussions reflect a proactive stance in navigating the current economic landscape, aiming to enhance the retirement fund's performance for the benefit of its stakeholders.