(January 13, 2011) — The State of Wisconsin Investment Board (SWIB) said it has invested $600 million with two risk parity strategy managers to achieve diversification and continued solid returns.
SWIB allocated $300 million each to AQR Capital Management and Bridgewater Associates’ All Weather vehicle, Global Pensions reported. The funds will be coming from cash and the multi asset liquidity fund, which is managed internally. According to the board, the additional risk parity portfolios is part of a plan to offer further diversification for the WRS Core Trust Fund. “We first approved this asset allocation in January, and we knew this would be a very slow process,” Vicki Hearing, SWIB public information officer, told aiCIO in August of last year.
Furthermore, the $81.9 billion pension fund is planning to commit $80 million to a new venture capital vehicle that will focus on high-growth companies in Wisconsin and the Midwest.
The revised strategies are part of SWIB’s new allocation targets, which the board adopted last January to achieve an asset allocation of 104% of its $64.6 billion core fund. The target allocation incorporates 28% US equities, 25% international equities, 26% fixed income, 7% TIPS, and 6% each private equity, real estate, and absolute return and multiasset strategies, according to its strategy submitted by Chief Investment Officer David Villa and Executive Director Keith Bozarth.
The new allocations come as the board announced its Core Fund had a preliminary return of 15.6% for 2010, while its $5.6 billion Variable Fund returned 12.3%, surpassing its benchmark by 0.2 percentage points. “While US stocks ended with a strong performance, uncertainty about economic recovery continues,” Keith Bozarth, executive director, said in a news release from the board. “Housing remains weak and the unemployment level remains high in the U.S. In addition, concerns over the global credit markets remain,” he said. “A change in direction for those factors would be a positive sign for improved economic growth.”