Montana Board of Investments is planning to reduce its allocation to core fixed income in favour of real estate according to the pension fund’s meeting document.

The $14.4bn (€12.4bn) pension fund is proposing to increase its targeted allocation for its real estate portfolio from 9% to 10% as it lowers core fixed income allocation 15% to 14%.

The pension fund said in the meeting document that real estate typically offers steady cash flows and is expected to generate a higher rate of return than core fixed income. Real estate is also less correlated with the equity asset classes, the pension fund stated in the meeting document.

The proposed changes are subject to approval next month.

Montana Board is known for investing in real estate through several strategies like core, core-plus, value-add and listed real estate investment trusts.

To read the digital edition of the latest IPE Real Assets magazine click here.