The Los Angeles City Employees’ Retirement System (LACERS) will give preference to Los Angeles-based companies in its alternative investment allocations, providing all else is considered equal in terms of performance, strategy, personnel, and philosophy.
Chair of the investment committee, Moctesuma Esparza, has requested that the traditional alternative investment policy include a provision relative to the geographic diversification of investments that would give preference to LA-based companies if all other considerations were equal.
Esparza also requested that the policy include a provision that would require diversity and workforce composition information from the general partners as part of the due diligence process.
The fund revised its alternative investment policy at the last investment committee meeting with a framework set for a more consistent and disciplined approach to the traditional core private equity portfolio, including additional due diligence and risk management oversight practices.
The fund is also considering expanding its asset allocation ranges by 25 per cent on the back of recent market fluctuations. At the end of April the US equity and non-US equity allocations were below their targets, and at 10 per cent the alternative allocations were above the 8 per cent target.
The board proposes the ranges be extended by 25 per cent at the upper and lower limits until a new asset allocation review can be completed.
At the end of April the target allocations were: 22 per cent to bonds, 1 per cent to cash, 42 per cent to US equities, 20 per cent to non-US equities, 7.4 per cent to real estate and 10 per cent to alternatives.