The San Diego City Employees’ Retirement System (SDCERS) is planning to increase its infrastructure allocation target from 3% to 4%, a move expected to help provide inflation protection.
The $10.3bn (€9.3bn) pension fund recommended the increase in a meeting document and said it is ”important to have exposure to inflation-sensitive assets to better hedge its abilities in a higher inflationary environment”.
SDCERS said infrastructure has exposure to long-term contracted revenue streams, adding that the income generation component of these investments will work to reduce the overall volatility of returns.
SDCERS currently has a $326.4m infrastructure portfolio comprising core-plus and value-add types of assets.
The pension fund said it expects to invest in core assets that could generate returns of 6% to 8%.
The implementation plan for the new allocation includes working with GCM Grosvenor and Stepstone to develop an investment plan, the pension fund disclosed.
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