Mississippi Public Employees' Retirement System's board of trustees approved a $75 commitment to AEW Partners Real Estate Fund IX at a board meeting Wednesday.
The Jackson-based $26.7 billion pension fund was looking to increase its allocation to private real estate after a Callan study showed that the fund was underallocated to the asset class, pension fund CIO Robert Clark, said during the virtual meeting.
AEW Capital Management, one of the pension fund's existing value-added real estate fund managers, offered the pension fund a 20% fee break, reducing its management fee to 80 basis points from 100 basis points. The fee reduction will "amount to well over $100 million in fee savings" over the life of the fund, Mr. Clark said.
The pension fund's current allocation to value-added real estate is about 11.3% and the target is 15%, Mr. Clark said.
The pension fund is an existing investor with AEW through a $50 million investment in AEW Partners Real Estate Fund VIII, a $50 million investment in AEW Partners VI and a $50 million investment in AEW Partners V.
The board also approved hiring three manager searches for the fund's optional retirement plan. The fund originally was looking to add a smidcap equity index fund for its three optional retirement plan third-party platforms — Voya Financial, AIG Retirement Services (formerly known as VALIC) and TIAA-CREF, introduce an S&P 500 index fund for the TIAA platform and select a money market fund to be included in the TIAA menu of options.
The pension fund selected State Street Global Advisors' Russell Small Cap Completeness Fund from among eight funds as its new smidcap equity index fund offering. It also voted to replace the CREF Equity Index Fund with the SSGA S&P 500 Index Fund, which had a lower expense ratio, for the TIAA platform. In addition, it selected the SSGA S&P 500 Index Fund to replace the more expensive large-cap U.S. equity index offerings on the Voya and AIG platforms.
Lastly, it selected the Vanguard Government Money Market Mutual Fund, managed by Vanguard Group, from among eight funds for the TIAA platform.