New Hampshire boosts alternatives target

While the target for alternative investments will increase from 10% to 15%, the target for fixed income will drop 5%, as the system adapts to the low interest rate environment.

The $5.7 billion New Hampshire Retirement System has hiked its allocation target to alternative investments, which includes private equity and debt.

The system’s board of trustees earlier this month approved increasing the target allocation to alternatives from 10 percent to 15 percent, and decreasing the target to fixed income from 25 percent to 30 percent. New Hampshire’s actual allocation to alternatives stood at 2.4 percent as of 31 August.

“The revised allocation allows the retirement system the flexibility to seek prudent opportunities in this slow growth environment, with the goal of reaching the long-term assumed rate of return of 7.75 percent,” Harold Janeway, chairman of the board’s investment committee, said in a statement.

Specific allocations within alternatives include 5 percent each to private equity and private debt; 3 percent to “opportunistic” and 2 percent to hedge funds. All the sub-asset class allocations have caps of 7 percent.

The system’s investment committee earlier this year approved the asset allocation shift, though final approval was needed from the full board.

New Hampshire determined it did not have any liquidity issues that would have hampered its ability to expand its exposure to illiquid investments, according to the statement.

The system has invested in private equity on and off for more than 20 years, and had been on “hiatus”, according to Lawrence Johansen, director of investments, in a prior interview.

New Hampshire skipped committing to private equity in 2002 and 2003, and again from 2006 through 2008. The system’s private equity portfolio had a market value of $132 million as of 31 March, 2012.

In 2010, the board laid out plans to invest $60 million a year in the asset class. Recent commitments include Lighthouse Capital Partners VII.