State of Wisconsin Investment Board (SWIB) is to invest in mortgage-backed securities (MBS) for the first time.
The pension fund plans to allocate 2% of its $104bn (€93.4bn) of assets, according to a board meeting report, meaning it could have just over $2bn to invest in the asset class.
SWIB will invest directly in MBS issued by Fannie Mae, Freddie Mac and Ginnie Mae that “were not part of the sub-prime contagion of the global financial crisis and have consistent performance over time, including in 2008”.
The new investments will form part of SWIB’s public fixed income portfolio and will be funded by decreasing the excess treasuries target from 3.9% to 1.9%.
SWIB said it had “no exposure and believes there is good opportunity to take active risk to produce alpha”.
The pension fund fund also announced it had committed $30m to invest in value-add industrial assets with Carson Companies. SWIB has been pursuing joint ventures with the industrial real estate specialist for several years.
SWIB is also considering committing $100m to an unnamed closed-ended US data-centre fund and investing $109m in a joint venture focused on mixed-use assets. It is also considering allocating $84m to real estate debt separate accounts.