By Muskan Arora
The $27.3bn Kansas Public Employees’
Retirement System increased its public equity and real assets interim targets with
a decrease in fixed income interim targets.
The system, with consultant Meketa, will
bring an implementation plan to the board in November, alongside suggestions
for manager changes.
Overweight in international
equity, the system rotated the funds to U.S. equity resulting in an increase in
the interim target of public equity to 45% from 44%.
The long-term target for U.S equity is 23%
and international equity at 18%, as approved by the board.
A yield-driven fixed-income portfolio saw a
decrease in its interim target allocation to 8% from 12%, alongside real estate
to 12% from 14%.
Both portfolios rotate into private real
assets, which has an increased interim target of 8% from 3%.
This is due to the “additional latitude
afforded by the new 25% statutory cap on alternatives”, as presented by CIO
Bruce Fink to the board.
Going forward, the board and staff plan to
allocate 5% to infrastructure from the increased 8% interim target, as the
system finds growing opportunities in timber and infrastructure.
“We are particularly focused on digital
infrastructure centers, because of the growth in computing. We are also keen on
artificial intelligence and power generation as the need for power is
increasing,” said Townsend to the board.
“Some conventional power generation
capacity is being taken offline; therefore, we think there's an opportunity
there to develop new power generation capacity,” added Townsend.
In the coming months, the system might
focus on closed-end funds with high risk and high returns for its core
strategies.
Kansas PERS returned 1.6% in the first
quarter of the year, against a benchmark of 1.3%.
