Los Angeles Fire & Police Pensions is planning to review its core real estate fund holdings.
According to board meeting documents, the pension fund and its real estate consultant The Townsend Group will monitor investments in core, open-ended funds and make recommendations for rebalancing where necessary.
Investments that have consistently underperformed will be evaluated for possible redemptions and presented to the board for action.
LA Fire & Police has investments in six core open-ended funds, representing a market value of $445m (€410m), as of the end of March 2015.
The move will form part of the pension fund’s investment plan for the 2015-16 fiscal year.
Board meeting documents show LA Fire & Police could also commit $210m in fresh capital to real estate funds over the next 12 months.
The new capital will come from growth in the pension fund’s underlying assets and from capital that is expected to be returned by existing non-core fund managers. LA Police & Fire expects non-core managers to make liquidations this year and in 2016.
The majority of the new capital ($150m) would be directed to non-core funds that invest in the US and Europe.
The remaining $60m will be invested in core funds. Townsend said that, due to competitiveness of the core markets, there would be a preference for core funds that provided “value arbitrage” and immediate diversification without having to enter long entry queues.