LOS ANGELES – The $6.5 billion Los Angeles City Employees’ Retirement System (LACERS) raised its asset allocation for alternative investments at a November board meeting to 5% from 3% and boosted its target to 7% from 4%, Chief Investment Officer Dan Gallagher said.
“What we really want to have funded is 5%,” he said, which is why the commitment target had to be raised.
As of September 30, LACERS had $162 million committed to alternatives, with $73.8 million already invested. The pension first established an alternative assets class two years ago, Mr. Gallagher said.
The pension’s real estate target allocation also was increased to 5% from 3%.
Changes in the allocation structure were based on a study by Asset Strategy Consulting as part of the pension’s annual review, Mr. Gallagher said. The study concluded that alternatives and real estate were “the two optimizers” that should be expanded, he said. Due to increases in these two classes, decreases were adopted for allocations to domestic and global bonds, emerging markets equity and cash.
It was only last June that LACERS bumped its alternatives allocation to 4% to get 3% of its portfolio invested in alternatives.
The pension has no geographic or industry preferences for its venture investments.