PHOENIX -The Oregon Investment Council is shifting the state's investment strategy to include more infrastructure and renewable energy investments and to reduce its exposure to stock market volatility.
The OIC announced the moves Dec. 9 as part of an effort to strengthen the state's public trust funds, including the Oregon Public Employees Retirement Fund. The pension fund totaled $69.7 billion as of Nov. 30.
"As fiduciaries of Oregon's public trust funds, the OIC seeks the highest value for taxpayers, schoolchildren, injured workers and public retirees," said Oregon Treasurer Ted Wheeler, who is one of six members of the OIC. "Financial markets are dynamic and increasingly competitive. These decisions are geared to improve the fund's sustainability and better moderate volatility over time."
The steps the council approved would continue a strategic shift of more fund investments into an asset class called alternatives, which include infrastructure, agriculture, and timberland. Returns on these investments are "less correlated" to traditional stocks and bonds and thus improve overall fund diversification, said chief investment officer John Skjervem.
The actions will also increase the fund's infrastructure and renewable energy investments with a new $400 million investment in a global infrastructure fund, contingent on negotiation of terms and legal approval.
"This commitment is part of the fund's aforementioned allocation to alternatives, and, by extension, its exposure to investment strategies less correlated with stock and bond market volatility," OIC said in a release.
OPERF posted a 7.3 percent return in 2014 and as of Sept. 30 had returned 1.2% for the previous 12-month period. Under current policy, the fund's assumed earnings rate is 7.5%, and investment returns now cover about 70 cents of every $1 paid in retirement benefits.
