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Staff outlines expansion of fixed-income allocation, new public-credit risk framework
Summary
Staff told the retirement board it is growing the fixed-income and cash allocation and has developed a public-credit portfolio construction framework that sets tracking-error, information-ratio and sector guardrails for manager selection and implementation.
At the board meeting, staff presented the pension system’s annual public fixed-income and cash update and described changes to benchmark construction and implementation plans as the fund increases its allocation to income-generating assets.
Curt and Alo Martins of the investment team said the board-approved strategic asset allocation adopted last year established new targets that increase fixed-income exposure: an 8% target to Treasuries, a 12% target to public credit and a 1% target to cash. Combined with private-credit work, staff said the long-term goal is to reach roughly 31% in income-generating assets over time.
Alo Martins described the portfolio’s objectives — liquidity, income,…
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