Arizona Pension Fund Increases Ability to Buy U.S. Junk Bonds

The Arizona State Retirement System changed its policy June 15 to allow up to 5 percent of its $28 billion portfolio to be invested in junk bonds. This provides flexibility to buy more if the market becomes attractive, said Gary Dokes, the fund’s chief investment officer. Dokes spoke to Bloomberg Brief’s David Holley.

Q: You increased the amount you can allocate to U.S. high yield bonds to 5 percent this year. Why?

A: We’ve increased it strategically. Have we increased our exposure? No. Will we increase it at lower spreads? No. But we want to have the flexibility. That’s key. Strategically, we’re underweight in fixed income, overweight in U.S. equities, underweight in non-U.S. equities.

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