US - Kentucky Retirement Systems (KRS) have awarded two emerging market mandates in the first stage of their portfolio restructure.
Adam Tosh, CIO, KRS, told Global Pensions: "We are undergoing a period of portfolio rebalancing by diversifying our assets and reducing exposure to domestic equity.
"The retirement system has historically invested conservatively, which was appropriate, but with funding levels currently sitting at 60% we need to make some bigger gains."
From a current allocation of 1.5% to emerging markets, Tosh said KRS would look to move to an initial 3-5% stake.
The systems, which control assets of US$17bn for five state retirement plans, have also launched a search for a real estate consultant and have taken an interest in the private equity field.
Tosh outlined KRS' outlook: "Globalisation and opportunity are the two watchwords for us looking forward. We have to be nimble and be able to react to changes in the market."
Having arrived at the retirement system a year ago, Tosh said its shortfall was partly due to a generous benefit system which enhanced its offerings as world markets suffered at the beginning of the decade.
The system's last allocation update showed it held 34% in US equities, 17.5% in international equities, 25% in fixed income, 12% in TIPS, 8.5% in alternatives and 2% in cash.
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