The California Public Employees’ Retirement System (CalPERS) has established a ‘harmonised’ real assets strategic plan for the next five years.
The $293bn (€259bn) pension fund said the plan largely continues the investment goals and parameters of its existing real estate, infrastructure and forestland programmes, but increases harmonisation while reducing risk and complexity.
“The unifying elements of this strategic plan will make the asset class less complex to manage, and make reporting more transparent,” said Paul Mouchakkaa, managing investment director for real assets.
CalPERS has been evaluating its approach to real assets for the past year as it looks to reduce risk, costs and complexity.
“This strategic plan builds on the tremendous work done to rebuild the programme after the mortgage meltdown and financial crisis,” said Henry Jones, CalPERS board vice president and investment committee chair.
“Real assets is a vital part of the CalPERS portfolio and this plan will keep it on the right track for the next five years.”
The plan also outlines ESG integration goals for the next five years, including manager expectations, risk assessment, and research.
Real assets benchmarks, the role of the fund’s forestland programme and real assets allocation will be examined next year.
The pension fund will continue to focus on high quality core assets primarily in US markets through separate accounts, while increasing its monitoring of leverage, with 55% as its limit.
CalPERS has put a hard cap on development opportunities. A ‘build-to-core’ strategy will make up to 10% of its real estate portfolio, as revealed last week.
It also confirmed it would go ahead with a pilot real estate programme to create real estate mandates where no leverage is used. Details of the pilot and a timeline for implementation are yet to be determined.
