UNITED STATES - The Texas Permanent School Fund has established a 6% targeted allocation to real estate, making this its foray into the asset class.
"We think that the timing of our decision is a good one," said David Bradley, chairman of the Texas Permanent School Fund Committee. "There are going to be some good investment opportunities in the marketplace that we can take advantage of."
The pension fund has yet to formulate an investment strategy, so will do so over the next few months. But Texas Permanent School has pension assets of around $19bn (€14.7bn) so has the capacity to invest $1bn-$1.2bn in the asset class over the next few years, putting in a strong strategic position against other US pension which are already over-allocated to real estate.
Texas Permanent School will be assisted in decision-making by its real estate consultant, Courtland Partners.
When a pension funds starts to build a real estate investment programme, it typically begins with a strategy of investing in core open-ended commingled funds with large and established portfolios that enable new investors to diversify quickly.
Should a move by Texas Permanent is likely to be a welcome sight for many open-ended core managers who have had a hard time paying out redemption queue requests in recent months against very little new capital flow.