BRAZIL - FUNCEF, Brazil's third-largest pension fund and one of the largest in Latin America, plans to allocate approximately BRL520m (€611m) to the fund's real estate portfolio in a bid to diversify its assets following a huge drop on its chosen equity index.
Brazil's main stock index, the Bovespa, fell by 21% this month, hitting local pension funds hard.
So in a bid to diversify its asssets further, Funcef, the pension fund which administers the supplementary plan for employees at the state-owned bank Caixa Economica Federal, will make investments in infrastructure and commercial real estate ventures worth over $2bn (€1.46bn) in 2008.
Jorge Arraes, director of real estate investment at the BRL32.1bn fund, said: "The goal is to surpass the $2bn mark and make even greater investments."
Brazil's economy grew 6.1% in the last quarter compared with just 2.3% in the US, making investments outside the stock markets attractive to Funcef, according to the fund.
Funcef has approximately 35% of its portfolio invested in equities at present but the new strategy will see the fund invest in ventures such as hotels, warehouses and could include an American-model shopping centre mall, known as Strip Centre.
Cities with over 1000 inhabitants such as Sao Paulo, Rio de Janeiro and Belo Horizonte are among the potential areas being considered for construction projects.
The fund is also planning an BRL80m (US or in local currency) investment in building the first shopping centre for Diadema, which will cover 85,000 square metres and will include a range of stores, food places, cinema rooms and a gym.
Funcef has also suggested they may make investments in infrastructure projects including ports and roads, as they offer the fund attractive business opportunities.