Colorado Public Employees Retirement Association (PERA) has increased its targeted real estate allocation from 8.5% to 10% as part of a new asset allocation resulting from an asset-liability study conducted by the pension fund.
The pension fund disclosed in a meeting document that the new asset allocation is expected to diversify the portfolio by reducing global equity and investing more in private asset classes like real estate and private equity.
This is expected to slightly lower risk and potentially increase returns over time for the entire investment portfolio.
Colorado PERA has allocated capital across all risk spectrums within the real estate sector. As of the end of March 2024, its portfolio consisted of 60% core, 22% value-add and 18% opportunistic investments.
The pension fund is also adjusting its allocation within the alternatives asset class, by increasing the sub-allocation to real assets from 1.65% to 3% while eliminating allocations to both hedge funds and opportunistic investments.
The real assets portfolio currently comprises 50% in infrastructure, with the remaining balance evenly split between timberland and agriculture.
The pension fund anticipates it will take two to three years to reach the newly established target asset allocation.
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