Puerto Rico Pension Reserve Trust Seeks Multi-Asset Strategy Managers

The underfunded pension fund appears to be shifting away from its fixed-income heavy portfolio. 

The Pension Reserve Trust of Puerto Rico sent out two
requests for proposals for new investment managers as the fund wants to diversify its portfolio and lower its allocation to fixed income.  

First, the fund is seeking a manager for a long-only, investment-grade corporate credit strategy, to which the manager would be allocated $660 million. The pension is also seeking a multi-asset strategy manager for long-only investments “across liquid, global investable markets.” The allocation to this manager will be $130 million.  

The fund holds a fixed-income heavy portfolio. According to the PRTPR website, PRTPR holds 74% of its assets in low-risk bonds, 14% in equities, 6% in riskier bonds, and 6% in various diversified investments, although the fund wants to further diversify. 

The PRT system started with an initial allocation of 100% in low-risk bonds but plans to reach an allocation of 55% to that asset class. Additionally, the fund plans to increase to 10% its allocation to bonds with more risk, described as global fixed income, below investment grade corporate bonds, and private credit. The fund seeks an allocation of 25% to equities, and 10% to other diversified investments, which according to the fund include real estate and tactical asset allocation strategies.  

“Our asset allocation is conservative, diversified and involves less risk than most pension funds,” the PRT notes in its 1Q 2023-2024 quarterly report, which follows the period ending September 30. 

The Pension Reserve Trust was established in January 2022 in order to restructure the territory’s underfunded and flailing pension system, which at one point had a funded status of 9.7% in 2010 and was a contributor to the bankruptcy of the territory in 2017.  

According to the PRTPRs timeline to hire new managers, the RFP was issued on January 26, while the deadline for submission of written questions was on February 16. Responses to RFP questions will occur on February 24, and the deadline for submission of cover letters is on March 1. Finalists will be selected for board interviews on March 29, with further steps to be determined.  

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