UNITED STATES - Teacher Retirement System has made its first ever investment in agriculture with a $250m (€145.9m) commitment into the AG Real Value Fund, managed by Teay's River Investments.
Texas Teachers is expected to make additional investments in agriculture in the future although it has yet to decide a set allocation.
The pension fund has placed the investment in the real assets sector of its portfolio. At the end of 2009, the scheme had invested $5.6bn in real assets with had total plan assets valued at $94.2bn.
Agricultural land assets are considered by many US pension funds as a safe and secure investment as this sector is less likely to go through the return highs and lows, as seen in other types of commercial real estate.
This focus on agricultural land investments is part of a growing trend among many of the large US public pension funds, as the bodies become more conservative in the risk they apply to their portfolios. And few investors are keen to take chances with new real estate investments, at least until the US economy shows some signs of improvement.
Investments in agriculture typically produce a 6% real rate of return on an annual basis.