New Mexico State Investment Council, Santa Fe, on Tuesday, committed up to $200 million to two real asset strategies.
The council committed up to $125 million to Brookfield Infrastructure Debt Fund II, an infrastructure credit fund expected to lend to energy, transportation and renewable energy projects managed by Brookfield Asset Management, an existing manager. Council officials expect to receive a discount on management fees for committing before the fund's first close. The fund did not purchase any assets before the coronavirus pandemic, which could be marked down as a result of the global economic dislocation caused by COVID-19 crisis.
The council also committed up to $75 million to a value-added real estate fund, Bell Institutional Fund VII, managed by multifamily manager Bell Partners. The fund has a $950 million target. The fund acquired three properties before the COVID-19 crisis, a memo to the council said.
The properties are more than 90% occupied and are generating positive net operating income, the memo said.
"However, any asset purchased prior to the COVID-19 pandemic is anticipated to experience a value adjustment," the memo said. "Of note, the fund has paused on making additional investments until further market certainty and will have substantial equity to take advantage of market distress."
Separately, the council temporarily broadened some of its equity managers asset allocation ranges to minimize transaction costs during a period of heightened volatility. The council increased the interim target allocation ranges for the Northern Trust's Russell 1000 Index strategy to plus or minus 15 percentage points from plus or minus 5 percentage points. Northern Trust ran a $1.4 billion in the Russell 1000 Index portfolio.
It also increased the interim targets for four active equity and factor-based U.S. strategies and one international equity portfolio. The target allocation ranges of T. Rowe Price and Brown Brothers Harriman's domestic large-cap equity portfolios and MFS Investment Management's active large-cap ex-U.S. growth equity as well as AQR and Scientific Beta's factor-based equity strategies were each increased to plus or minus 10 percentage points from plus or minus 5 percentage points.
T. Rowe Price managed $580.9 million in an actively domestic managed large-cap active equity portfolio, Brown Brothers Harriman ran a $451.9 million active U.S. large-cap equity portfolio and MFS managed $497.6 million in an active large-cap ex-US growth equity portfolio as of March 31. AQR managed $641.7 million and Scientific Beta ran $581.3 million as of March 31.