Pennsylvania boosts alternatives allocation

The $27bn retirement system defines alternatives as including mezzanine, distressed debt and secondary strategies.

The Pennsylvania State Employees’ Retirement System increased its 10-year target allocation for alternative investments from 14 percent to 15 percent, according to a statement released on Wednesday.

The alternative allocation is comprised of private equity, venture capital and ‘special situations’, which Pennsylvania defines as including mezzanine credit strategies, distressed debt and secondary opportunities. Alternative investments accounted for 22 percent of Pennsylvania’s total allocation as of 31 January, according to the statement.

The 10-year target for fixed income fell from 19 percent to 15 percent. Fixed income comprised approximately 15 percent of Pennsylvania’s portfolio as of 31 January.

The changes to Pennsylvania’s asset allocation targets will allow the retirement system to maintain its 7.5 percent assumed investment rate of return, according to a statement.

“Given the long-term time horizon and the overall consistency with SERS’ ongoing strategic investment goals, these refinements do not signal a new direction or indicate any significant or impending movement of assets. We will continue our incremental, disciplined, and deliberate approach to reaching our targets,” chairman Glenn Becker said in a statement.