Investments

A risk parity approach adopted in 2010 allows a portion of the portfolio to be conservatively leveraged; reducing the total expected risk of the portfolio without sacrificing the expected return. Essentially, the risk parity approach balances OP&F’s exposure among investment classes that perform differently in various economic and market environments.

Actual Allocation as of March 31, 2012:

U.S. Equity..............37.3%
Non-U.S. Equity..........22.4%
Fixed Income.............11.1%
Global Inflation
Protected Securities......7.0%
High Yield Bonds..........8.9%
Real Estate...............8.6%
Private Markets...........3.7%
Cash......................1.0%

Transition Policy Benchmark for Q1 2012:

U.S. Equity..............30.9%
Non-U.S. Equity..........21.7%
Core Fixed Income.........6.5%
Long Duration Bonds.......2.5%
Global Inflation
Protected Securities......6.5%
High Yield Bonds.........15.0%
Real Estate..............10.0%
Private Markets...........4.0%
Timber....................1.0%
Commodities...............2.0%
Cash......................0.0%

Long-Term Policy Benchmark:

U.S. Equity..............21.7%
Non-U.S. Equity..........21.7%
Long Duration Bonds......23.7%
Global Inflation
Protected Securities.....12.9%
High Yield Bonds.........15.0%
Real Estate..............12.0%
Private Markets...........7.0%
Timber....................3.0%
Commodities...............3.0%

The OP&F investment portfolio is governed by state statute requiring a "prudent person" standard to be applied to all investment decisions.

This standard requires fiduciaries to "discharge their duties solely in the interest of the fund participants and beneficiaries and with the degree of diligence, care and skill which prudent persons would ordinarily exercise under similar circumstances in a like position."

The OP&F Board of Trustees serve as fiduciaries and determine the policies and strategies for the investment portfolio. The OP&F Investment staff and our professional advisors work with the Board of Trustees to ensure the portfolio contains an appropriate amount of risk and produces an adequate expected rate of return.

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Send all Investment related questions or concerns to investments. To ensure you receive a response from us, please add investments@op-f.org to your list of approved senders.