Los Angeles Water and Power Employees’ Retirement Plan is planning to make its first investment in infrastructure, aiming for the new asset class to eventually make up 50% of its $884.5m (€809m) real return portfolio.
The proposal, which was disclosed in the pension fund’s board meeting document, involves reducing commodities to 25% from 30%, cutting passive short-duration treasury inflation-protected securities to 25% from 70% and removing the 3% timber allocation entirely to fund infrastructure.
The move reflects the pension fund’s view that infrastructure offers the potential for stronger risk-adjusted returns compared with more liquid real return strategies.
If the proposed real return portfolio changes are approved, the Los Angeles Water and Power and its consultant RVK will then create a plan to fund private infrastructure managers later this year.
The pension fund also disclosed in the meeting document that it has made a $50m commitment to Harrison Street Core Property Fund, a core open-ended US real estate fund with a $9.6bn net asset value.
Harrison Street, the fund’s manager, invests in alternative property sectors including student and senior housing, medical offices, self-storage facilities and data centres.
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