UNITED STATES - California Public Employees Retirement System wants to invest as much as $1.3bn (€961.5bn) in infrastructure during 2010.
The initial focus will be investments in the United States and Europe.
The pension fund is planning to invest $400m in a direct investment strategy. Most other pension funds in the US invest in infrastructure through either commingled funds or separate accounts.
According to CalPERS officials, the benefits of direct investment is greater control and more focused capital deployments, the avoidance of manager fees and progress towards its goal of being a leading infrastructure investor.
The remaining $900m allocated to the sector for this year would be done though commingled funds on a global basis.
CalPERS have established a benchmark return for infrastructure of CPI plus 4%.
According to CalPERS officials, the rationale for infrastructure is mainly diversification using long-term income-based investments that aren’t correlated strongly with global equity, the investor’s largest asset class.
CalPERS has made commitments to infrastructure totaling $1.1bn. Some $400m was committed to funds transferred from the pension fund’s investments in real estate and private equity. This was moved into the inflation-linked asset class, which includes infrastructure.
A further $700m has been committed to commingled funds. One of these was a $200m allocation to the CIM Infrastructure Fund. By August of 2009, less than 10% of that amount had been drawn down.
CalPERS has made allocations in three other commingled funds. These were $100m each to Carlyle Infrastructure Partner and Alinda Infrastructure Fund I and $300m to Alinda Infrastructure Fund II.
The pension fund’s target allocation for infrastructure is 1.5% of total plan assets within a range of 0.5% to 3.