Connecticut Retirement to rebalance overweight core property portfolio
Connecticut Retirement Plans and Trust Funds (CRPTF) plans to reduce its exposure to core real estate and increase its weighting to non-core properties to help rebalance its portfolio.
The pension fund said in a board meeting document that it intends to commit a total of $250m (€220m) to several non-core funds and will issue redemptions totalling $200m from some of its $1.53bn existing investments held in open-ended core funds.
CRPTF’s allocation to non-core real estate is set at 50%, split equally between value-add and opportunistic assets. The pension fund is, however, underweight as it currently has an exposure of 16% and 20% to value-add and opportunistic strategies, respectively, within the portfolio.
Open-ended core funds makes up 56% of the pension fund’s real estate portfolio, above its 50% target allocation.
CRPTF is invested in open-ended core funds managed by Morgan Stanley, Barings, USAA Real Estate, UBS, PGIM Real Estate and JP Morgan.
The pension fund’s investment consultant NEPC backed its recommendations saying there are strong investment opportunities in non-core strategies.
“For the US we continue to favour demographically-driven strategies such as senior housing,” the consultant said.
“Outside the US, Europe remains a relatively attractive opportunity for asset-focused managers who are not making macro bets on growth.”
CRPTF said it holds a 7% long-term allocation to real estate and plans a potential increase to 8%.