The Health Care Fund managed by the Ohio Public Employees Retirement System is to increase its target allocation to US real estate investment trusts (REITs) from 6% to 7%, according to a board meeting report.
The change is part of a new asset allocation, which includes ending its 5% hedge-fund allocation and lower emerging market debt from 6% to 2%.
The Health Care Fundβs $694m (β¬579m) REIT portfolio represented 5.6% of its $12.3bn of assets at the end of September, implying an additional $130m in investment capacity.
Ohio PERS told ΒιΆΉΣ³» Real Assets that the new REIT allocation was designed βto provide moderate inflation protectionβ.
The fundβs REIT portfolio has marginally outperformed its benchmark β Dow Jones US Select Real Estate Securities Index β over the past three and five years, by 2bps and 1bps, respectively.
Ohio PERS believes the new asset allocation will help save $6.2m in annual management fees and is projected to generate a higher 10-year return of 5.6%, versus 5.48% for the previous asset allocation.
