Brookfield and SCERS devise bespoke listed real assets strategy

Sacramento County Employees’ Retirement System (SCERS) is close to awarding Brookfield Asset Management a $100m (€90.9m) listed real assets mandate.

The board of the $9.24bn pension fund will meet on Wednesday to discuss hiring Brookfield’s public securities group to run a customised version of its Diversified Real Assets (DRA) strategy.

According to a board meeting report, SCERS and its investment consultant Verus have worked with Brookfield to create bespoke weightings to the asset classes covered by the strategy.

The customised version will have a higher weighting to real asset debt – 40% versus the standard DRA weighting of 15%.

SCERS said it wanted a greater exposure to debt because this will provide a higher level of income, reduce equity risk and add further diversification.

The mandate will also pursue a lower weighting to global real estate (20% versus the standard DRA weighting of 35%), a lower weighting to global infrastructure (30% versus 40%), and a higher weighting to REIT preferreds (10% versus 5%).

Unlike the standard DRA strategy, SCERS will not invest in master limited partnerships, and there is an option to invest opportunistically, up to 20%, in inflation-sensitive assets.

The move follows the pension fund’s decision in June to replace a 2% commodities exposure – which forms part of its real-return portfolio – with a liquid real-return allocation.

The $100m mandate would be funded by reducing an existing $215m passive liquid real-return overlay provided by State Street Global Advisors.

Brookfield was among four investment managers interviewed for the mandate, including DWS, Nuveen and PIMCO.

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