UNITED STATES - Ohio Public Employees Retirement System has decided to increase its targeted allocation to real estate from 7% to 10%.
This should give the pension fund a significant sum to invest in real estate in 2010, as the Ohio PERS real estate portfolio was valued at $4.21bn (€2.9bn) at the end of June, and made up 8.38% of its $50.21bn of its total assets under management.
Pension fund officials say the rationale behind the real estate component increase, as well as in other alternatives asset investments, is to increase the expected risk-adjusted returns of OPERS' defined benefit fund.
Alongside real estate, the alternatives asset class has also seen a new 2% allocation to infrastructure while the opportunistic/hedge funds sector allocation has been increased from 1% to 3%.
Ohio PERS has also made a slight adjustment to its classifications and moved its 1% allocation to REITs to within the new 10% allocation to real estate.
Ohio PERS is expected to unveil an investment strategy for the new capital, following assistance of its consultant, The Townsend Group, at its December 2009 board meeting.
The pension fund currently invests approximately 60% of its real estate assets in separate accounts, while 20% is held in open-ended commingled funds and 20% is in close-ended commingled funds.
Both core and tactical investments have already made and it is understood that REITs will be considered a tactical investment.
Ohio PERS has now increased its total allocation to alternative investments asset class from 14% to 25%. This was accomplished by reducing holdings in public equity from 62% to 50% while public fixed income holdings were tweaked from 24% to 25%.