Kentucky PPA Significantly Ups Allocation to Specialty Credit

In an effort to reduce risk while maintaining similar expected returns, the Kentucky Public Pension Authority (KPPA) on August 28 approved a shift in allocation for its County Employees Retirement System (CERS) that sees the target for specialty credit increase from 13% to 23%, according to newly filed board minutes.

Offsetting the increased allocation to specialty credit, KPPA decreased the target allocation for public equity for CERS to 45% from 50%, for private equity to 8% from 10%, for real estate to 5% from 7%, and for real assets to 7% from 13%. The pension also bumped its target allocation for cash to 2%. 

Wilshire advised on the allocation changes, noting that when KPPA last shifted target allocations in 2021 it reduced core fixed income and specialty credit while increasing equity. 

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