Asset Allocation

Asset allocation means investing funds across different markets or asset classes in an attempt to dampen the overall volatility of IPERS' investment returns. This decision of how to diversify the portfolio has a great influence on investment returns. The Investment Board decides what risks are prudent to take and makes its asset allocation decision by adopting a policy benchmark that identifies the portion of the Trust Fund to invest in each asset class. IPERS’ investment staff periodically rebalance the Fund’s investments to keep the portfolio in line with the policy benchmark, but variances may occur from time to time because of market conditions.

Domestic Equity: Investment in the stocks of companies that are based in the United States.^*

International Equity: Investment in the stocks of companies that are based outside the United States.

Equity Real Estate: Investment in properties, and in the stocks of companies that manage properties, in the four major commercial real estate sectors (office, industrial, retail, and apartments).

Private Equity/Debt: Investment in the stock and debt of privately held companies. These investments are held in limited partnerships designed to limit IPERS’ potential losses.

Core Plus Fixed Income: Investment in bonds issued by governments and companies throughout the world.

High Yield Bonds: Investment in corporate bonds that are below investment grade, and are expected to provide higher returns.

^*IPERS uses “portable alpha” strategies in its domestic equity portfolio. These strategies obtain the desired market exposure to the U.S. stock market through S&P 500 stock index futures. However, the source of any excess returns versus the market (known as “alpha”) will come from various active investment strategies that may invest in securities from several different asset classes.