US - The US$33.5bn Los Angeles County Employees' Retirement Association (LACERA) has tendered for domestic enhanced core fixed income services.
Juan Almaguer, principal investment officer of public markets at LACERA said it was a new mandate and a result of a change to the overall fixed income strategy.
“We are reducing our strategic allocation to domestic high yield bonds from 15% of the fixed income portfolio to 7%,” said Almaguer. “Assets are being shifted from high yield to enhanced core.”
The term of the contract will be for a period of one year with automatic one-year renewals at LACERA's discretion.
Speaking about the services to be provided, LACERA’s board of investments said its account would include securities rated investment grade (BBB- or above by Standard & Poor's or equivalent) by at least one major credit rating agency.
“Limited tactical use of extended sectors will be allowed, and on a case-by-case basis, derivatives, and convertibles may be permitted in this account,” the board said.
“Finally, the modified adjusted duration of the portfolio will be restricted to +/- 25% of the Lehman Brothers Aggregate Bond Index’s modified adjusted duration.”
Almaguer said no other changes were expected at present for fixed income.
LACERA’s current asset allocation includes 57% in domestic and international equities, 27% in domestic fixed income, 9% in real estate and 5% in alternative assets.
The deadline for responses is March 17, 2006.
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