State of Wisconsin Investment Board, Madison, approved changes to the asset allocation of the Wisconsin Retirement System’s $109.4 billion Core Trust Fund, including increases to the targets for private equity/debt and real estate.
The board, which manages a total of $137.6 billion in assets, approved the changes at its meeting Wednesday, spokeswoman Vicki Hearing said in an email.
The changes are an increase in the target for private equity/debt to 15% from 12% and real estate to 8% from 7%, which will be funded by a reduction in the target to public equities to 48% from 52%.
Investment consultant NEPC recommended the changes in order to “expand the range around private markets given growth as well as liquidity and modeling analysis,” it said in a presentation included with board meeting materials.
The targets to public fixed income and inflation-sensitive assets remain unchanged at 25% and 19%, respectively. Targets total 115% due to leverage.
Along with the changes in asset-class targets were structural changes in the public equities subasset class. Within public equities, the board increased the target to global equities to 79.5% of the public equity portfolio from 77.6% and reduced the targets to domestic small-cap equities and international small-cap equities to 6.5% and 4.1%, respectively, from 6.9% and 4.6%.
Also within public equities, the board reduced the targets to emerging markets ex-China and China equities to 6.8% and 1.6%, respectively, from 7.5% and 1.9%. The target of 1.5% to emerging markets small-cap equities remains unchanged.
As of Sept. 30, the core trust fund’s actual allocation was 43.6% public equities, 23.3% public fixed income, 18.9% inflation sensitive assets, 18.7% private equity/debt, 10.6% real estate and -15.1% leverage.