Kentucky Public Pensions Authority (KPPA) has approved a $175m (€163.1m) initial capital investment for a new separate account managed by Saba Capital Management, according to the pension fund’s board meeting document.

The new separate account will target undervalued, closed-end limited partnerships in real asset funds like utilities, energy, and infrastructure, currently trading at a 15% discount to their net asset value, aiming for a net return between 8% and 12%.  

The “value and activist strategy” will also involve other equity and fixed-income investments.

Completion of the investment is subject to an investment management agreement between the parties.

KPPA has placed this investment into its real return asset class investment portfolio.

The separate account marks the pension fund’s initial venture with Saba Capital.

Saba Capital did not respond to a request for comment.

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