UNITED STATES - Indiana Public Employees Retirement Fund has approved $300m (€205.7m) worth of real estate investments as it moves into the asset class for the first time.
The pension fund decided at its board meeting on December 21 to invest $200m in US-based commingled funds core real estate and $100m in global Reits, assisted in its action by consultant Mercer.
Indiana PERF currently has assets of $16.1bn but has decided to allocate up to 3%, or £483m, in real estate, for several reasons. One key reason, according to officials, is real estate offers equity-like returns at a lower risk while a determining factor for its shift into real estate is its low correlations with the other major asset classes, providing an attractive diversification benefit.
The $200m allocated for core commingled fund investments was split with $100m each going into the Prudential Property Investment Separate Account (PRISA) and Morgan Stanley's $9.2bn Prime Property Fund, both of which held assets of $14.6bn and $9.2bn to September 30, 2007 respectively. Both funds are also predominantly invested in US-based office, industrial, retail and apartments.
The remaining $100m was invested following a global REIT manager search which saw Indiana PERF allocate up to $60m to Invesco Real Estate and up to $40m to European Investors.