New Mexico State Investment Council (SIC) has approved changes to its $4.2bn (€3.9bn) real return portfolio’s sub-allocations, leading to increased investment in the infrastructure sector.
Previously, infrastructure was included in the sovereign wealth fund’s real assets sub-allocation, comprising 70% to 90% of the asset class alongside energy, commodities, farmland, timberland and other real assets, with a 10% to 30% allocation to master limited partnerships (MLPs).
Under the new allocation, infrastructure now accounts for 75% to 95% of the real return portfolio, with the remaining 5% to 25% designated for natural resources, including agriculture, timber, hydrocarbons and metals & materials. MLPs no longer have a dedicated allocation.
According to New Mexico SIC, infrastructure investments are favoured due to their perceived lower correlation to other asset classes, diversification potential and income-producing characteristics.
The sovereign wealth fund disclosed in a meeting document that its long-term infrastructure investment plan involves shifting towards increased exposure to value-add/opportunistic assets and reducing its exposure to core/core-plus assets.
Currently, New Mexico SIC’s $2.8bn infrastructure portfolio consists of 48% core/core plus and 52% value-add/opportunistic. The planned long-term allocation is to range from 25% to 50% for core/core-plus and 50% to 75% for value-add/opportunistic.
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