Ohio School Employees Retirement System, Columbus, is segregating its real estate and infrastructure investments within its overall global real assets portfolio to provide better performance evaluation.
The $17.2 billion pension fund's board approved the change at its Dec. 21 meeting, according to board meeting highlights emailed by spokesman Tim Barbour.
Before the board's decision, the combined global real assets portfolio, which consists of real estate and infrastructure, was benchmarked to the NCREIF Property index.
The global real assets portfolio was created in 2013 when the pension fund's board decided to add infrastructure and paired it alongside the existing real estate allocation. The original target was 12% and the board increased to the targets in 2016, 2020 and 2023, respectively, to a respective 15%, 17% and 20%.
In a presentation included with board meeting materials, staff said "the return history indicates that infrastructure returns have been more stable over the period and not subject to the cyclical pattern of real estate returns particularly in the one-year period where real estate had a negative return while Infrastructure had a strong positive return. Staff believes that due to the current size of the infrastructure program and the short-term performance deviations, it is appropriate to segregate Real Estate and Infrastructure within the current total fund policy allocation and to specify a compatible benchmark for Infrastructure."
The board's decision to segregate the two asset classes creates global real estate and global infrastructure asset classes with respective target allocations of 13% and 7%. The real estate benchmark remains the same, and the global infrastructure benchmark is a quarterly smoothed consumer price index plus 1.2 percentage points per quarter.
As of Oct. 31, the pension fund's actual allocation to global real assets was 20.6%.
