South Korea's National Pension Service, Jeonju, will benchmark $1 billion in real estate allocations to a new FTSE Russell index.
The FTSE EPRA Nareit Developed Extended Opportunities RIC 6/45 Capped Index was created in consultation with NPS and was added to FTSE Russell's standard index series for other investors to access, according to an announcement on Tuesday.
The index currently has 70 constituents across 10 countries such as Australia, Belgium, Canada, Singapore, the U.S., and the U.K., and has a dividend yield of 4.05%. The index will be reviewed quarterly and new additions must pass eligibility criteria which include size and liquidity screens.
It includes specific subsectors and niche non-core property exposure sectors comprising developed REITs and non-REITs. These include data centers, senior care, life science, timber, single family, manufactured homes, student housing and offices with specific tenant exposure.
The property sectors and tenant profile exposures were determined by NPS, the statement said. A FTSE Russell spokesperson did not immediately provide further details.
NPS, which has 939.1 trillion won ($719.6 billion) in assets under management, will use the index as part of its completion portfolio strategy, the statement said. NPS did not provide further detail about the allocation.
"We are excited about this new index as it will play a key role for NPS to implement a completion strategy to further diversify its real estate portfolio. This index not only provides immediate access to a broader set of specialty sector opportunities but will also greatly enhance the risk-adjusted return of the entire real estate portfolio in the long run," NPS Chief Investment Officer Seo Won-joo said in the statement.
FTSE Russell created the index in partnership with the European Real Estate Association and The National Association of Real Estate Investment Trusts.
