Fresno ups private equity allocation, launches infrastructure

The $2.7bn Fresno County Employees’ Retirement Association has increased its exposure to private equity and real estate while launching a new ‘real asset’ allocation, which includes infrastructure.

The Fresno County Employees’ Retirement Association (FCERA) has increased its target allocation to private equity to 7.1 percent from 6 percent, one of several major changes the $2.7 billion (€1.8 billion) pension is making to its asset mix.

FCERA has roughly $127 million committed to private equity, accounting for 4.7 percent of the fund’s total investment portfolio as of last March. The pension made its most recent commitments to the asset class year, including a $25 million commitment to Warburg Pincus and a $75 million commitment to Hamilton Lane.
“We felt it was time to bring a new asset allocation to the board,” Roberto Pena, FCERA retirement administrator, told PEO. “There wasn’t any particular event or decision, it was actually a part of our regular business structure.”

The private equity allocation rise was one of several policy changes recommended to FCERA’s board of directors last week by investment consulting firm Wurts and Associates. The board approved several major adjustments in its asset mix, and will consider an implementation plan with manager recommendations next month.

Like many other US pensions battered by the poor performance of the public markets, the retirement system also opted to reduce its US large cap equity exposure from 28 percent to 23.7 percent and its international large-cap equity from 15 percent to 12.2 percent.

Some of the resources freed by FCERA’s decreased involvement in public equities will go towards the pension’s new 11 percent real asset allocation, an umbrella asset class that includes real estate, infrastructure and commodities.

Under the new asset mix, the pension will increase its allocation to real estate investments to 6 percent from 4 percent. Infrastructure and commodities will receive allocations of 2 percent and 3 percent, respectively.