The Missouri Local Government Employees Retirement System is investing $175m (€157.6m) in real assets, allocating $75m to the Fireside Real Estate Partners III fund.
Fireside Financial, which invests in the US Midwest, has produced returns in the high teens on its two previous funds, according to Brian Collett, CIO at the pension fund.
The manager typically buys assets from small, non-institutional sellers.
Fireside is planning a $200m equity raise for Partners III, which has an opportunistic investment strategy.
The amount of leveraged planned for the fund is 65-70%.
Partners III will only be buying existing assets, avoiding developments and targeting properties that need to be repositioned.
The fund is aiming for half of the fund to be invested in multifamily, 40% in self-storage and a limited amount in office buildings.
Missouri has also allocated $100m to the Global Infrastructure Partners Fund III.
The pension fund has a total of 15% of its $6.1bn in total plan assets invested in real assets, with a 5% real estate allocation.
Missouri is looking for additional investment opportunities in infrastructure to meet its 8% target allocation for the asset class.
The remaining 2% for real assets is invested in timber.