California Public Employees Retirement System (CalPERS) is providing $250m (€224m) for JP Morgan’s Asia-Pacific Property Fund.
The $293bn pension fund is set to announce the commitment at its investment committee meeting on Monday.
JP Morgan Asset Management had been rumoured to be planning the launch of pan-Asian real estate fund, alongside a raft of other investment managers with similar plans.
Sources have told IPE Real Estate that US pension funds are increasingly looking at core pan-Asian funds as part of their international diversification. Uncertainty in Europe following the UK referendum could accelerate that trend in the short term as US investors wait for more clarity.
JP Morgan, which recently bought retail and office assets in Australia, is expected to buy assets for the fund in the next couple of months, according to sources familiar with the matter.
The fund will invest across a number of office, industrial, retail and residential markets.
CalPERS has been seeking to reweight its real estate portfolio so that 75% of its holdings are in core, income-producing assets.
As a result, the pension fund will be focusing on office, industrial, retail and residential markets in the US, with the vast majority of investments coming through separate accounts.
At the end of May, CalPERS had $25.8bn invested in real estate, representing 8.8% of its total assets, below its target allocation of 10%.