Ohio Bureau of Workers Compensation (BWC) plans to suspend making new real estate commitments as it has become over-allocated to the asset class, mainly due to the denominator effect of a fall in listed markets.
The provider of workers’ compensation insurance revealed in a meeting document that it is proposing the suspension after declines in its equity and bond portfolios caused an over-exposure to real estate. Ohio BWC said the real estate portfolio has also been pushed beyond its target allocation as a result of the positive returns recorded by the asset class.
Ohio BWC’s previous plan was to make value-add real estate fund investments in 2022.
As of March this year, Ohio BWC’s real estate exposure was 18.6% compared with a 15% allocation target and an allowed range of 12% to 18%. Ohio BWC proposes a new real estate allocation range of 10% to 20%.
Ohio BWC’s core real estate portfolio recorded a 7.2% year-to-date and 27.3% one-year return whereas the US equities portfolio recorded -18.6% year-to-date and a one-year return of -7.8%.
Non-US equities recorded -14.1% year-to-date return and -14% one-year return. US fixed income’s return was -9.2% year to date and recorded -8.1% for a one-year return.
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