The Oregon Investment Council (OIC) held its regular meeting on September 2, where it adopted new long-term asset allocation targets for the Oregon Public Employees Retirement Fund (OPERF). This decision marks a significant milestone, concluding a multi-year process to evaluate the pension fund’s investment strategy, risk profile, and long-term obligations of the Oregon Public Employees Retirement System (PERS) while setting the course for future management of the fund.

Taking into account extensive expert input, the OIC voted to distribute risk more evenly across the portfolio while increasing the fund’s projected future earnings compared to the previous allocation targets. Aligning with OPERF’s strategic investment objectives, the newly adopted allocations will support the portfolio’s ability to pursue stable, risk-adjusted returns in years when markets are performing well while preserving capital during periods of market stress. The new allocations also establish Credit as a standalone asset class, shifting investments from the existing Fixed Income and Opportunity portfolios to provide greater flexibility in managing credit exposures. These changes include:

• Forecasted earnings for the newly adopted allocation targets (+7.3%) would keep the portfolio generating returns that would exceed the current PERS assumed rate (+6.9%).
• Lowering the allocation target of the Private Equity portfolio to 19%.
• Allocating the largest percentage of investments to Public Equity and Fixed Income, 26% and 20% respectfully.
• Increasing allocations to Real Assets, which has been OPERF’s best performing portfolio (+12.23%) over the previous 5-year period ending July 31, 2026.
• Holding steady, with minimal adjustments to the allocation targets for the Real Estate and Diversifying Strategies portfolios.

Oregon State Treasurer Elizabeth Steiner, MD, said, “even as we’re on track to eliminate PERS’ unfunded liability within the next ten years, we all want to see better returns for Oregon’s public employee retirement fund. These decisions position the fund for the future growth, stability, and liquidity we need to stay true to our obligations to hard-working educators, first responders, and other public employees, as well as all Oregonians who rely on their services. As Treasurer, this is my first opportunity to shape Oregon’s investment strategy. Today’s OIC vote is consistent with my investment principles. I support the Council’s decision to dial back on private equity and target more of our investments toward fixed income and public equities.”

The adoption of the new allocation targets follows the completion of the OIC’s asset-liability study, a comprehensive review undertaken every three to five years to help ensure OPERF’s investment strategy remains aligned with the fund’s objectives. The study examines the relationship between the fund’s investments, expected market conditions, forecasted system pension obligations, and how different portfolio constructions could balance desired long-term returns with risk and short-term liquidity factors, to support the more than $4 billion in annual benefit payments.

A collaborative effort between OIC, Treasury investment staff, and OIC consultants – with insights from PERS actuaries – the study’s findings help shape the allocation of OPERF’s approximately $104 billion in assets under management across its primary portfolios: Public and Private Equities, Fixed Income, Real Estate, Real Assets, Diversifying Strategies, and Credit. The Asset-Liability Study formally considered Credit as a separate strategic asset portfolio. The newly adopted policy allocation targets include:

• Public Equity: 26%
• Fixed Income: 20%
• Private Equity: 19%
• Real Estate: 10%
• Real Assets: 10%
• Diversifying Strategies: 7.5%
• Credit: 7.5%

“Today’s decision reflects the Council’s long-term responsibility to Oregon’s public employees and retirees,” said OIC Chair Alline Akintore. “The adopted allocations are designed to hold up across a wide range of market conditions so that OPERF can meet its obligations well into the future. I am grateful to investment staff, PERS partners, consultants, and my fellow Council members for the expertise and collaboration they brought to this rigorous process.”

Following the selection of new policy targets, the OIC will review and modify policy asset allocation ranges, if necessary, evaluate current benchmarks, and develop a transition plan for achieving new policy targets. Updates to OIC investment policies to reflect the newly adopted targets and ranges will be completed by early 2027. The transition plan for implementing and rebalancing the portfolio will occur over the next several years.

Other agenda items included quarterly performance reviews of OPERF and the Common School Fund, a joint discussion with members of the PERS Board on issues affecting the long-term management and financial outlook of Oregon’s public pension system, and updates on new investment commitments from Chief Investment Officer Rex Kim and time for public comment.

During OPERF’s quarterly performance review, staff and consultants reported that the fund earned 3.5% for the quarterly period ending June 30, falling short of its policy benchmark by 0.6%. The performance came during a period in which global markets posted strong returns, led by the continued enthusiasm within domestic equities for artificial intelligence, partially offset by geopolitical tensions and ongoing inflation concerns. Consultants noted over the trailing one-year period – from July 1, 2025, to June 30, 2026 – OPERF returned 8.6%, outpacing the pension system’s 6.9% assumed rate of return, with positive returns across all asset classes.

OIC members received a quarterly performance update about the Common School Fund, a fund generated from revenues on state-owned lands to provide additional funding for Oregon’s public K-12 school districts. Staff and consultants reported for the quarterly period ending June 30 that the fund returned 8.7% outperforming its policy benchmark.

The OIC is a six-member board responsible for setting investment policy for OPERF and other state investment funds. Four members are appointed by the governor. The state treasurer and the director of the Public Employees Retirement System serve by position.

The next OIC meeting is scheduled for Wednesday, October 21, 2026.