Pennsylvania PSERS ups REITs allocation
Pennsylvania Public School Employees Retirement System (PSERS) is slightly reducing its allocation to private real estate in favour of listed property securities to help improve diversification.
In a board meeting document, the $56.7bn (€51.2bn) pension fund said it will cut its private real estate allocation from 9% to 8% and increase its allocation to real estate investment trusts (REITs) from 1% to 2%.
Pennsylvania PSERS said the move will help improve diversification of its real estate portfolio and maintain a consistent allocation to illiquid assets by offsetting investments made in private infrastructure.
The pension fund’s decision – which follows an asset allocation study conducted consultant Aon – is the reverse action taken by some fellow US pension funds recently.
Orange County Employees Retirement System, State Universities Retirement System of Illinois and Maryland State & Retirement Pension System have all moved capital out of REITs and into private real estate.
However, the $237bn California State Teachers’ Retirement System recently hired Principal Real Estate Investors as its first REIT manager and expects to allocate $400m to REITs over the next three years.