San Bernardino County Moves to Trim Foreign Stocks

The California county’s plan, already low on equities, reduces its stock allotment further due to the world’s troubles.

Investing abroad has been a longstanding trend among asset allocators seeking greater diversification. But the $14.2 billion San Bernardino County Employees’ Retirement Association is pulling in its international stock investments and shifting the money to domestic equities.


The program, as of March, has 13.2% of its assets in domestic equities with a target of 17%, and is drawing down its international developed market equity and emerging market debt holdings. Foreign stock is 11.7% and EM debt 6.7%.


The asset realignment seeks to adjust to “a world where supply chains are realigned due to macro political factors, trade flow, and a deglobalization trend away from China,” says a statement from the plan.


“Sanctions on Russia highlight the global sensitivity to a USD-based system, potentially increasing the likelihood of separate spheres of influence between the U.S. and China,” it explains. “The regulatory reset and similar top-down initiatives may incite further volatility on the country’s long transition path, creating a tail-risk for market and economic contagion.”


The San Bernardino plan has a remarkably low amount of stocks; they make up about a quarter of its assets. The fund is concentrated on income generation amid today’s low returns, and is maintaining cash on hand at 7.4%, which it says it might use for opportunistic purchases.


Public plans typically have a higher allotment of equities—47.2% of assets as of last year, according to the Public Plans Data list, with fixed income the next largest category, at 22%.


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