$7.5bn Philadelphia pension fund to make first private debt allocations
The Philadelphia Board of Pensions and Retirement will make its first private debt allocations by the end of the second quarter of 2024.
Following a board meeting held on 26 October 2023, the pension fund approved a new investment plan which will see two per cent of the $7.5bn (£5.91bn) fund invested in private debt. A further three per cent will be allocated to opportunistic credit investments.
The fund has also upped its fixed income allocations from 13 per cent to 14 per cent, and has introduced a four per cent target for 91-day treasury bills.
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During the meeting, the board opted to eliminate its one per cent allocation towards global aggregate fixed income as well as a one per cent high yield allocation. It has also reduced its overall target for domestic equities from 24 per cent to 28 per cent.
The overall target for international equities was similarly reduced, from 13 per cent to 12 per cent. The board also approved a reduction in private equity allocations, from 10 per cent to eight per cent, while emerging markets equities were reduced from three per cent to two per cent.
The new allocation plan was approved following a discussion with board members, led by the fund’s chief investment officer Christopher DiFusco.
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According to minutes from the meeting, the board agreed that the new investment plan “factors in the steady decline in the return assumption (target rate of return) while also maintaining the same core building blocks of equites, fixed income, real assets, and private market investments.”
The board agreed that the transition to this new allocation strategy could be concluded by the end of the second quarter of the year, subject to market conditions and the direction of the Fed’s interest rate policy.
Investment consultant Marquette Associates assisted with the asset allocation review.
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