Orange County Employees Retirement System (OCERS) has placed a core fund managed by ASB Real Estate Investments on its watch list for underperformance.

OCERS said in a board meeting document that in addition to placing its $177.7m (€152m) held in ASB Allegiance Real Estate Fund on a watch list, it plans to rebalance its $1.1bn core open-ended fund portfolio in the coming months.

Current funds besides ASB Allegiance are AEW Core Property Trust, Jamestown Premiere Property Fund, JP Morgan Strategic Property Fund and Prime Property Fund.

The decisions were made under the advice of its consultant The Townsend Group.

The ASB fund last year earned a net internal rate of return of 9.9% since inception, below the NFI-ODCE benchmark of 10.5% over the same time period. The performance places the fund in the bottom quartile of the open-ended fund universe.

Formed in 1984, the fund outperformed the benchmark during its seven and 10-year periods.

ASB declined a request for comment.

Townsend said the underperformance by the fund was partly due to the low leverage placed on the fund. This was at 14.7% versus leverage in the NFI-ODCE Index of 21.5%.

The consultant also attributed the underperformance to the fund’s high-street retail portfolio in the SoHo neighbourhood of New York City and the fund’s underweight position to industrial warehouse assets.