PERA Board Adopts New Strategic Asset Allocation Following Asset/Liability Study

DENVER—The Colorado PERA Board of Trustees has adopted new long-term asset allocation targets following a yearlong study into PERA’s investment portfolio and strategy.

The new strategic asset allocation is expected to provide incrementally greater diversification in the portfolio by reducing the percentage allotted to Global Equity and investing more in private asset classes such as Private Equity and Real Estate with the goal to slightly lower risk and add potential for higher returns over time for the entire investment portfolio.

The Board adopted the following targets at its September 20, 2024 meeting, approving the policy recommendations of its investment consultant, Aon:

Within the Alternatives asset class, the new policy increases allocations to real assets and private debt while reducing allocations to hedge funds and opportunistic investments.

In addition to the new asset allocation targets, the Board also approved new benchmarks for the Private Equity and Alternatives asset classes to reflect the updated allocations. The Board also reaffirmed its long-term expected rate of return of 7.25%.

The PERA Board conducts an asset/liability study every four or five years to examine the PERA Defined Benefit Plan portfolio and ensure the mix of stocks, bonds, and other investments aligns with PERA’s funding goals. The last asset/liability study took place in 2019.

By making changes to PERA’s strategic asset allocation, the Board is aiming to strengthen PERA’s investment portfolio and ensure the Fund remains on track to meet its goal of full funding.

“Asset allocation is the single largest driver of investment returns, and I appreciate the attention and care the Board has given to analyzing and updating our strategic asset allocation,” said Chief Investment Officer/Chief Operating Officer Amy C. McGarrity. “These new long-term targets are expected to help reduce risk in the portfolio and ensure we can continue to provide the lifetime retirement income that so many of Colorado’s public employees rely on.”

PERA expects to reach its new long-term targets within two to three years. If the shift results in any changes to fund managers in the private asset classes, PERA will post updated information online after any changes are made.

Colorado PERA provides retirement and other benefits to nearly 700,000 current and former teachers, State Troopers, corrections officers, snowplow drivers, and other public employees who provide valuable service to all of Colorado. PERA is a vital and stable contributor to Colorado’s economy, distributing $4.56 billion in 2023 to more than 114,000 retirees who live in Colorado.