By Muskan Arora
The $26.1bn
City of Hartford OPEB has a wider appetite for opportunities within the emerging
market space, as per the consultant NEPC.
The system
has made no allocations to the portfolio yet.
With a
target allocation range of 0%-4%, consultant NEPC presented an updated strategic
asset allocation policy, as per the recent board materials.
The target allocation of the sleeve is 2%, as of June 2024.
"Global equity strategies offer a compelling alpha opportunity, we encourage greater use of active equity approaches," as stated by the consultant in the meeting materials.
The pension plan allocates $12.7bn to its equity sleeve, with the most exposure to domestic equity at $8.2bn, as of June 2024.
Due to attractive real interest rates in the current environment, NEPC recommended introducing a dedicated U.S. TIPS exposure to strategic policy targets.
The pension
plan returned 10.9%, 2.4% and 6% for its 1-,3- and 5-year return against a
benchmark of 11.5%, 2.1% and 6.1% respectively, as of June 2024.
Furthermore, in
the meeting materials, the consultant presented themes that will impact the
investment landscape for the next twelve months.
Not just
Hartford, but most allocators in space believe AI, geopolitics and tariffs will have significant impact in the coming year.
Since Fed
policy has slowed consumer and corporate debt expansion, federal debt issuance
is the exception – debt expansion remains a top theme of the year.
