Pennsylvania State Employees’ Retirement System (PA SERS) plans to increase its exposure to real estate, having reviewed its real assets allocation.
The $26.5bn (€24.2bn) pension fund has created a standalone real estate allocation, according to its 2016-17 strategic investment plan, having previously included the asset class within its real assets portfolio alongside private energy and commodities.
Its overall strategic allocation to real estate has also been increased from 10% to 12%.
As part of the new strategy, PA SERS plans to invest $100-200m in closed-ended real estate funds pursuing higher-return, non-core strategies.
The pension fund also wants to allocate $50-100m to “best-in-class” managers, with which it hopes to build long-term strategic partnerships.
PA SERS said this would improve operational efficiency by reducing the number of funds, while improving its ability to negotiate lower management fees.
The pension fund is also exploring the viability of creating a separate account programme to invest solely in real estate within the state of Pennsylvania.