Asset allocation refers to the percentage distribution of investments grouped by asset class. An asset class consists of investments having in common certain fundamental and risk-based characteristics. The Board, in conjunction with advice from Staff and the Investment Consultant, is responsible for setting the Strategic Asset Allocation (SAA) for the Fund and reviewing it periodically.

Asset/Liability studies are conducted at least every five years and provide the primary basis for changes to the SAA.  Relevant policies are amended when a proposed investment strategy is adopted, and during times of phased transition to a new allocation, current values may deviate from the target SAA. The Board will review its asset allocations annually, or sooner, if a material event in either the liability structure of the Plan or the capital markets warrants a sooner look.

Based on its most recent determination of the appropriate risk tolerance of the Fund and its long-term return expectations, the Board in consultation with the Staff and Investment Consultant has established the Strategic Target Allocations, Strategic Rebalancing Ranges, and Tactical Rebalancing Ranges as percentages of the Fund’s asset classes and sub-asset classes shown below. These prescribed ranges for the policy weights allow for the fluctuations that are inherent in market values of portfolio investments and to allow for prudent risk management for the Fund.

These rebalancing ranges are established according to the following philosophy and criteria:

• Tactical Rebalancing Ranges are calibrated to reflect the diversity of asset mix among peers with second or third quartile allocations as determined by investment consultant data. These ranges aim to delineate the typical operating range of the actual allocation of the Fund under normal market conditions.
   
• Strategic Rebalancing Ranges are calibrated to reflect the diversity of asset class mix among peers with first quartile and fourth quartile allocations excluding those peers in the top or bottom five percent as determined by investment consultant data. These ranges aim to delineate the less typical operating range of the actual allocation of the Fund under unusual market conditions.

In all cases the asset allocation shall conform to the prescribed ranges unless otherwise authorized at a regular or called meeting of the Board.