UNITED STATES - State Universities Retirement System of Illinois has approved a $75m (€60m) commitment to AVP Advisors for a fund-of-funds real estate investment strategy.
There are two other pension funds that will be investing the same amount as part of the same strategy: Public School Teachers' Pension and Retirement Fund of Chicago and the Illinois State Board of Investment, though these two are still working through their own processes and have yet to finalise any deal.
"The reason we have decided to invest along with the other pension funds is that we have achieve greater diversification together. There was no way that we could invest $225m of capital on our own to this strategy," said Daniel Allen, chief investment officer for Illinois State Universities.
Many US pension funds are now looking at fund-of-funds (FoFs) as a real estate strategy as there has been a great deal of growth real estate commingled funds over recent years.
There are now in excess of 500 commingled funds being offered to US institutional investors so pension fund and consultants are finding it difficult to review them all, whereas a fund-of-funds strategy allows several funds to be considered through with a single commitment.
AVP Advisors was selected through a manager search conducted by Illinois State Universities and its consultant, Ennis Knupp + Associates.
A total of nine managers had initially responded to the search but Illinois State Universities liked the amount of experience AVP Advisors has had in investing in FoFs, as the real estate manager used this strategy for a portion of the capital raised for its own commingled fund, the $400m American Value Partners Fund I closed to new money in February 2008.