The Health Care Fund managed by the Ohio Public Employees Retirement System (PERS) is to lower its target allocation to US real estate investment trusts (REITs) from 7% to 5%, according to a board meeting report.
Ohio PERS’s investment consultant NEPC said the reduction was being made to capitalise on higher yields available in the fixed-income markets while reducing allocations to certain asset classes that could be negatively impacted as inflation levels continue to moderate.
Ohio PERS also reduced the fund’s allocation target to commodities by 1% and raised fixed income by 3%.
The REIT portfolio equalled or slightly outperformed the Dow Jones US Select Real estate Securities Index Total Return benchmark for every time-period over the past 10 years.
As of the end of 2023, REITs accounted for 6.5% or $833.7m of the Health Care Fund’s overall $12.7bn portfolio.
The REIT portfolio, which is managed in-house, is the only real estate investment held by the Health Care Fund.
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