UK - North Yorkshire local authority pension scheme is looking to invest £75m (€84m) in up to four UK property funds, representing its first foray into the asset class.
The £1.5bn scheme will focus on large core or core-plus UK real estate funds with at most minor exposure to non-UK real estate. The selected fund managers, which the scheme expects to outperform the IPD UK All Balanced Funds index, will be appointed on three-year rolling contracts.
The domestic focus reflects the scheme's positive prognosis for the UK property market in the short term.
Tom Morrison, principal accountant at the scheme said: "This is our first investment in real estate and we're more comfortable starting with the UK market with a view to eventually investing in global real estate."
Only fund managers with assets under management of more than £250m are eligible to bid for the mandates, which represent around 5% of the pension fund's overall portfolio.
"We don't want to be a significant investor in any specific fund because we're concerned about liquidity. That's why we've opted for pooled rather than segregated funds," said Morrison. "At the moment we only invest in fixed income and equities, both of which are extremely liquid."
He added that the scheme's consultants had advised it to invest in multiple funds because it would allow broader sectoral exposure to the UK market at relatively low risk.
The scheme made the decision to tender following a strategic review that coincided with the scheme's valuation process last year.
"The investment committee has been mulling the decision to invest in property for some time. It believes a small allocation to real estate would complement the portfolio nicely," said Morrison.