The CIO of the Alaska Permanent Fund Corporation (APFC) has proposed moving its $1.57bn (€1.42bn) portfolio of publicly-traded real estate investment trusts (REITs) back into its real estate allocation.
REITs have formed part of the sovereign wealth fund’s $16bn “fixed income plus” allocation since 2016, but Marcus Frampton who replaced Russell Read as CIO last year has recommended making them part of its $4.1bn real estate allocation.
“I wasn’t the CIO at the time, but I think the former CIO viewed listed infrastructure and REITs as publicly-traded yield instruments and, as a result wanted to group them with fixed income,” Frampton told IPE Real Assets.
“Now that I’m CIO, I have a different view of REITs in the portfolio. I believe that their portfolio role is closest aligned with the real estate asset class and therefore am proposing to move them from fixed income.”
The move could happen in May 2020 when the board of APFC is due to meet.
The plan would be for REITs to make up to 15% of the real estate portfolio over time. This might mean APFC would have to reduce its REIT portfolio as end-of-June figures suggest REITs would today represent more than a quarter of the total real estate allocation.
APFC runs two global REIT strategies – a $626m active porfolio managed by AEW and $924m passive portfolio overseen by State Street – benchmarked against the S&P Global REIT Index.
Frampton was promoted from head of real assets and absolute return to CIO last year, after Read left APFC to join MSCI as global head of client solutions.