Ohio SERS bets on infrastructure outperforming real estate
School Employees Retirement System of Ohio (Ohio SERS) plans to eschew new real estate investments in favour of infrastructure over the next 12 months.
A spokesperson said the pension fund would invest about $100m (€88.6m) in real assets during the 2019-20 fiscal year, but would focus exclusively on infrastructure.
Ohio SERS has been reallocating capital from real estate to infrastructure over the past three years.
It plans to increase the infrastructure share of its real assets portfolio from 17% today to 21% over the next 12 months. The rest of the real assets portfolio is made up of real estate.
A board meeting report shows that Ohio SERS expects infrastructure to generate returns of 8-10%, net of fees, outperforming real estate by approximately 200bps.
The pension fund has already approved a $40m commitment to the Harrison Street Social Infrastructure Fund and it has been 12 months since Ohio SERS last issued a commitment to a real estate fund.
The pension fund is maintaining the current weighting within its real estate porfolio, which is underweight office and retail, and overweight industrial and specialist property types such as student housing and senior housing.