Employees’ Retirement System of Rhode Island (ERSRI) has approved a commitment to an opportunistic US real estate fund and plans to invest in real estate investment trusts (REITs).

The $8bn pension fund stated in a board meeting document that it will put $35m (€30.5m) into the Raith Real Estate Fund II.

Raith Capital Partners is targeting a $400m capital raise for Fund II. The manager will co-invest at least $2m.

The fund will focus on US real estate markets with limited new supply, strong demographics and demand.

ERSRI is also working with consultants NEPC to appoint a company to manage a REIT portfolio, with the potential to hire additional managers later in the year.

The REIT investments would form part of the pension fund’s income class portfolio, which also includes credit and master limited partnerships.

The income class has been set up to target “high and stable income to offset the pension fund’s negative cash flow”, it said.

REITs will represent 12.5% of the income class portfolio which has an 8% allocation.