UNITED STATES - Pennsylvania State Employees Retirement System has made a $75m (€48.7m) commitment into the fund of funds offering known as Oculus Small Cap real estate fund I.

Overall, the size of the Pennsylvania pension fund investment staff has changed little over the past couple of years but the same cannot be said for the number of commingled funds in the market, so the fund felt it was necessary to look to consider investment in the fund of funds market, according to Rob Kochis, principal with The Townsend Group - the real estate consultant to Pennsylvania State.

"Two or three years ago, there were probably around 200 commingled funds in the marketplace that needed to be researched. Now we are most likely looking at 500 commingled funds for a possible investment. The pension fund staff just doesn't have enough time to look at all of them," said Kochis.

The Oculus commingled fund is looking at investing some of its capital into these commingled funds but the Pennsylvania State commitment does have a restriction on it to ensure its own allocation amounts to more than 15% of the total capital raise.

New York-based Clerestory Capital Partners is the real estate manager on the commingled fund which has to raise at least $500m in equity from other investors for the commitment from Pennsylvania State to become effective.

Projected return for investors in 18% net IRR but Clerestory has also placed a restriction on the fund preventing it from investing in any commingled fund with more than $1bn worth of equity raised.

The real estate manager has so far made one commitment - a $30m investment into the Gateway fund invested in China - but a second commingled investment is being invested in the Kutak Fund.

Clerestory will invest in commingled funds invested in real estate on a global basis but many of the commingled funds it will look at are likely to be run by new or relatively new managers to the pension fund real estate arena.

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