In an overhaul of its asset allocation policy, the Oregon Investment Council, a pioneer private-equity investor, will reduce the Oregon Public Employees’ Retirement Fund’s investments into private equity while increasing its public-asset investments.
The change follows a multi-year evaluation of the pension fund’s investment strategy, risk profile and long-term obligations, the OIC announced Wednesday.
The OIC’s new policy allocation includes the following targets:
- 26% to public equity;
- 20% to fixed income;
- 19% to private equity;
- 10% to real estate;
- 10% to real assets;
- 7.5% to diversifying strategies; and
- 7.5% to credit.
The OIC first invested with Kohlberg Kravis Roberts & Co., now KKR, in 1978. The latest changes come after the OIC was criticized in the state for under-allocating to public markets and resulting underperformance.
State Treasurer Elizabeth Steiner, in a letter last year, supported changing the allocations.
“While it is true that historically private equity has added significant value to our funds, I agree with the OIC and staff’s decision to reduce our overall allocation in this asset class to better align with the OIC target of 20%,” Steiner wrote, noting that state staff had begun lowering the allocation from 28% in 2023.
As of July, the fund allocated 24.1% to public equity, 23% to private equity, 20.6% to fixed income, 13.1% to real estate, 10.6% to real assets, 5.8% to diversifying strategies, 2.6% to an opportunity portfolio and 0.1% to cash with overlay.
The new policy aims to distribute risk more evenly across the portfolio, the OIC stated, while increasing the fund’s projected future earnings compared to its previous allocation targets, to eliminate a funding deficit within the next 10 years.
The OIC stated that the newly adopted targets could provide annualized forecasted returns of 7.3%, exceeding the fund’s assumed rate of return of 6.9%, the return the fund needs to meet its liabilities.
The new policy will also establish credit as a standalone asset class, “shifting investments from the existing fixed income and opportunity portfolios to provide greater flexibility in managing credit exposures,” the OIC wrote.
The new policy will also increase allocations to real assets, which has been Oregon’s best performing asset class over the previous five-year period, with a five-year annualized return of 12.23%.
While the private equity target has been reduced by 1 percentage point, the fund has long noted that it has been overweight to the asset class. “I support the Council’s decision to dial back on private equity and target more of our investments toward fixed income and public equities,” Steiner said in a statement, when the new allocation was released.
OPERF, managed by the OIC and the Oregon State Treasury, managed $106.9 billion in assets as of December 31, 2025.