Ohio Bureau of Workers' Compensation, Columbus, is considering doubling the real estate target allocation for its $24 billion State Insurance Fund, spokeswoman Melissa Vince said.
The staff and investment consultant RVK have recommended changing the fund's overall real estate target to 12% from 6%, because of real estate's attractive returns, long-term inflation protection and a “helpful liability match with lower volatility,” a memo from RVK said.
Within the real estate target, the fund would have a new core-plus target of 3% of the whole fund, while core real estate would increase to 7% from 4.5% and value-added real estate would increase to 2% from 1.5%.
The increase would be funded by reductions in the U.S. Treasury inflation-protected securities target to 10% from 14% and the long-duration government bonds target to 4% from 6%.
Ms. Vince said a vote on the target changes would likely take place at the bureau's Feb. 27 board of directors meeting. She did not know whether RFPs and/or manager terminations would be likely.
The fund's other targets would remain unchanged at 28% long-duration credit bonds, 20% domestic equities, 15% U.S. aggregate core-plus bonds, 10% international equities, and 1% cash and cash equivalents.