Alameda County Employees Retirement Association (ACERA) is considering rebalancing its core-only open-ended funds’ real estate portfolio due to the portfolio’s underperformance.
Subject to completing a review with the help of ACERA’s consultant Callen and board approval, the $7.4bn (€bn) pension fund would issue partial redemption requests out of the UBS Trumbull Property Fund, JP Morgan Strategic Property Fund and the MetLife Core Property core open-ended funds and re-invest with new managers.
Investing with new managers is expected to give the pension fund exposure to smaller managers who have been outperforming the benchmark recently and will lead to further diversification in the portfolio, ACERA said in a meeting document.
Core assets make up 70% of ACERA’s $593.8m (€502.5m) real estate portfolio.
Last year, the core-only segment within the portfolio produced returns 3.7% versus the 4.6% recorded by the NFI-ODCE Index. The portfolio recorded 6% and 8.1% for the last three and five years respectively, compared with the benchmarks 6.3% and 8.4% during the same periods.
The core-plus segment within the portfolio produced returns of 12.8% for 2019, 13.1% for the last three years and 13.3% for five years.
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