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.
