Asset Allocation

The State Treasurer takes a conservative approach to asset allocation to maintain a diversified and balanced investment approach, while recognizing the liquidity needs, funding status, risk tolerance, and return objectives of the North Carolina Retirement System.

Asset allocation is the most important and fundamental step in investing any pool of money, since asset allocation has a significant impact on generating return and controlling risk. The North Carolina Retirement System invests its assets in a wide range of investments equity, fixed income, real estate and alternatives .

Equity investments consist of publicly owned stock or other securities representing an ownership interest. This asset class includes domestic small, medium and large capitalization stocks as well as international. The asset class is managed in three different styles: passive, enhanced and active.

Fixed income consists of long-term investment grade corporate securities, treasuries, agencies and GNMAs; and, short-term investments consist of treasuries, agencies, and some liquid short-term corporate issues.

Real estate consists of investments in a diverse array of real estate property types such as office, residential, retail, industrial and lodging. This asset class includes opportunities both within the United States and internationally. The asset class is an actively managed portfolio of separate accounts, open-end funds, closed-end funds, and co-investment funds.

Alternative investments consist of interests in private corporations (not listed in the stock exchange) and hedge funds, or specialized funds. This asset class includes opportunities both within the United States and internationally. Specific types of private equity strategies will include venture capital, buyout, and opportunistic/special situations investments and hedge fund strategies include arbitrage, event-driven, and global asset allocator, or “macro,” funds.

General Statute 147-69.2