BY MICHAEL CORKERY

Just five years ago, it was illegal for South Carolina’s public pension plan to invest in hedge funds, private equity and other complicated bets.

Now, nearly half its assets are in such investments. That is way too much for the state treasurer, who is charged with squeezing the most out of the $26 billion pension fund.

Curtis Loftis, a 53-year-old pest-control company owner who was elected South Carolina’s treasurer in 2010, is one of the few public-pension officials in the U.S. trying to trim back “alternative” investments. Most public pension funds are struggling to hit annual return targets of about …