UNITED STATES - More pension funds are expected to move into investing in infrastructure in the months ahead as New Jersey Division of Investment, California State Teachers Retirement System and Alaska Permanent Fund Corporation have now expressed an interest.
The State of New Jersey is now looking at making its initial moving into investing in infrastructure and planning to allocate around 1% to 2% of its total assets, amounting to a total investment of between $1bn-$2bn (€741.9m-€1.48bn).
This latest allocation would be a part of a 5% allocation for inflation sensitive assets, as agreed at the pension fund’s board meeting on May 17th, but there is no indication at this stage of whether the investments will be made through commingled funds or separate accounts.
According to State of New Jersey figures, there are several reasons why infrastructure would fit well into its overall investment portfolio including the delivery of inflation hedge, diversification, higher returns and long-term cash flow.
This pension fund believes infrastructure could be divided four main areas - energy, transport, water and social –while the investments themselves could go into global infrastructure assets related to utilities, toll roads, bridges, wastewater and education facilities.
Investments are expected to be placed in projects in Japan, United Kingdom, Western Europe, Germany and Sweden as well as infrastructure opportunities in the United States, notably those in California, New York, Texas and Florida.
CalSTRS is also thinking about making a move into infrastructure so has hired Courtland Partners to look make recommendations but no specific target allocation have been made at this time.