The Employees Retirement System of Texas is planning to commit up to $250m (€221m) to real estate in its 2017 fiscal year, according to a board meeting document.

The pension fund’s investment staff said non-core investment strategies appeared to offer better risk-adjusted return opportunities than core.

Most capital will be invested through funds, with the pension fund exploring the idea of investing through different structures such as separate accounts or co-investments.

Texas Employees said its investment staff would consider finding alternative investments that were better priced and had lower correlations to traditional core property.

It will consider medical office, timber, agriculture and core properties, although the main focus will be on non-core assets, either in value-add or opportunistic strategies.

It may also increase its international exposure, including in Asia and/or Latin America.

Texas Employees has a total private real estate portfolio of $2.84bn, with core accounting for $775m and non-core $2.1bn.

As of March, the pension fund’s real estate portfolio had produced a net IRR of 12.74% since inception.

The current portfolio is overweight industrial, multifamily and hotels and underweight office and retail.

The industrial overweight is a tactical decision to invest in a property type with secular drivers at an attractive entry point.

The overweight will diminish as future commitments are made to other property types and as industrial investments are liquidated.