Major U.S. pension funds are increasingly turning to infrastructure for its solid risk-adjusted return profile and strong performance resilience.
Since 2011, Pensions & Investments has tracked more than 950 infrastructures hires totaling more than $134 billion committed, paced by 148 hires and $17.7 billion committed in 2021.
Maine Public Employees Retirement System, Augusta, is also drawn to infrastructure due to its ability provide diversification from the plan's public and private equity and fixed-income assets, said William Proom, managing director of investments who oversees the fund's infrastructure investing efforts.
The $18.2 billion fund has been investing in infrastructure for 15 years and currently has a 10% allocation to the asset class. It prefers to invest with generalist managers that "can pick and choose across all of the infrastructure sectors in order to select the most attractive risk-adjusted opportunities available," Mr. Proom said.
Given MainePERS' focus on generalist infrastructure managers, Mr. Proom said its portfolio is well diversified across all six sectors that currently comprise the infrastructure universe: telecommunications, energy and energy transition, transportation and logistics, power and utilities, and social and environmental. Between 2006 and 2022, 43% of the money MainePERS invested in infrastructure went to energy and energy transition, Mr. Proom added.
While MainePERS does not currently invest with a manager executing a specific renewables strategy, the plan has exposure to renewables through generalist funds, CIO James Bennett said.
Mr. Bennett added, "We are hearing from our generalist funds that renewables are becoming more attractive and we are seeing higher proportions of those in funds today than we did five to 10 years ago."
MainePERS will continue to evaluate the "growing number of players who are focused exclusively in the energy transition area," Mr. Proom said. "And as they build a track record and exhibit expertise across a wide swath of the energy transition landscape, we will be more and more seriously evaluating those types of commitments."