The California Public Employees Retirement System’s (CalPERS) real estate investment consultant has called on the pension fund to broaden its investment vehicles to include more vehicles like funds and co-investments to help reach a new real estate allocation target.

Meketa Investment said in a meeting document that the $481.2bn (€415.8bn) pension fund will likely need to invest in a broader array of investment vehicles than it has in the past to reach its new real estate allocation target.

CalPERS is expected to increase its real assets allocation from 13% to 15% in the 2023 fiscal year starting in July. Real estate accounts for 82.1% of the real asset portfolio.

CalPERS, which mainly invests in real estate through direct investing with separately managed accounts, has over the past 10 years not reached its target allocation.

Core real estate, which accounts for 88.2% of the pension fund’s $45bn (€39.3bn) real portfolio, recorded a 7.4% net return on a five-year basis compared with the MSCI/PREA benchmark of 6.5%. On a 10-year basis, the return was 12.6%, beating the benchmark by 360 basis points.

To read the latest edition of the latest IPE Real Assets magazine click here.

Topics