Pennsylvania Public School Employees’ Retirement System (PSERS) has reduced its real estate allocation by one percentage point for the second year in a row.
The target will drop from 10% to 11%, according to a board meeting report. The pension fund made a similar move last year.
The latest reduction is part of a number of asset allocation shifts designed to better position Pennsylvania PSERS for a potential market downturn.
The pension fund announced that it had slightly increased its allocation to fixed income and cash, and decreased its weighting to public equities, leverage, risk parity and real estate.
Glen Grell, executive director for the pension fund, said: “The actions the board took today are minor adjustments focused on risk reduction, to better protect our members’ assets should the markets correct from the recent highs.
“If the market correction occurs, we will be better prepared and these minor changes to the asset allocation will help limit the negative impact to the fund.”
Pennsylvania PSERS is likely to be less active in real estate markets than it has been in recent years as a result of the allocation change.
However, the pension fund, which is being advised by Aon Hewitt Investment Consulting, plans to expand its in-house co-investment, private debt and secondary investments programmes, which could include real estate.