Michigan Municipal Employees' Retirement System, Lansing, allocated $180 million to the Australian Pastoral Fund, which purchases large-scale cattle and sheep farms in the northern and eastern Australia.
The ranchland fund, managed by Australian Pastoral Funds Management, is building a portfolio of “broadly diversified grassland holdings and associated livestock (production) for both domestic and export markets. The fund will embrace sound environmental, animal welfare and human resource management practices,” according to a news release from the $7 billion pension fund.
Funding comes from a reallocation from existing managers in MERS' 5% commodities allocation, said Jeb Burns, chief investment officer, in an interview.
MERS will be able to generate uncorrelated returns by capitalizing on global natural resource-based macro trends, Mr. Burns said, noting that the investment is “really a protein play, since a significant portion of beef and mutton from the Australian farms will be exported to meet the demand of the growing middle class in Asian countries.”