Wespath Investment Management division of the General Board of Pension and Health Benefits of the United Methodist Church, Glenview, Ill., committed $50 million to Hancock Timberland XII, said Dave Zellner, chief investment officer of both organizations.
The commitment to the Hancock Timber Resource Group fund is the result of an invitation-only search, Mr. Zellner said.
Funding comes from a new 5% allocation to a combined asset class of real assets and alternatives investments for their $2.2 billion inflation-protection fund.
Wespath, which oversees a total $20.2 billion in assets for the board, could undertake searches for managers for timberland, energy or other real assets, although it has no immediate plans or time frame, Mr. Zellner said.
Wespath hasn't determined how it will split the allocation of the new asset class between real assets and alternatives. “We haven't done anything yet” in setting a timetable or in determining the types of alternatives, although hedge funds have been ruled out over issues of transparency and risk-adjusted return, Mr. Zellner said. For now, the alternatives part of the allocation is just a placeholder, Mr. Zellner said.
To add the new asset class, Wespath reduced to 35% from 40% the passive Treasury inflation-protected securities managed by Neuberger Berman Fixed Income, reducing its portfolio to $1.6 billion of the inflation-protection fund.
Wespath made the allocation changes to enhance diversification, Mr. Zellner said. The board didn't use a consultant.
Wespath uses the inflation-protection fund across the allocations of the board's approximately $9.9 billion in defined contribution assets and $7.9 billion in defined benefit assets, as well as $2.4 billion in assets managed for other United Methodist-affiliated institutional investment management clients.