Analysis by S&P Global Market Intelligence shows that U.S. public pension funds are increasing allocations to real estate assets to hedge against market volatility.
A study of the latest June meeting minutes and investment reports from the 40 largest U.S. public pension plans found that an increase in real estate investment was the most frequently cited change in investment strategy.
This change is driven in part by market volatility. Of all alternative assets, real estate is the most commonly used as a hedge against inflation, according to surveys of institutional investors. As inflation rises, real asset prices tend to rise. At the same time, real estate is also the asset class most commonly used to diversify portfolio risk, with 76% of respondents saying they invest in real estate for this purpose.
A report released in November 2021 by the investment committees of California Public Employees Retirement Association (') and California Teachers' Retirement Association (State's) showed that both institutions raised their real asset allocation targets from 13% the previous year. to about 15%. The Alaska Retirement Board (Board) also increased its target allocation to this asset class from 13% to 14% in its 2021 and 2022 investment reports.
The largest investment category among REITs among pension funds remains multifamily rental properties, but there is also growing focus on industrial real estate, a category that has benefited from growth in e-commerce during the pandemic — for warehouses and logistics — and mileage delivery ( last mile delivery). miles) demand increases. Strong demand for these facilities means the industry will benefit in the long term, according to a June report from the Ohio Teachers Retirement System. Both the Florida government and ARM reports said the industrial sector will make up for weaker parts of the market such as office and retail.
U.S. public pension funds that have invested in real estate in recent months, including the New York State Fund, committed $500 million to Real (Real $20 million from Fund III, a fund managed by IPI LLC; and the Pennsylvania Public School Employees Retirement System (Pennsylvania Public School Employees Retirement System) invested $100 million in EQT's EQT Core-Plus Fund IV LP.
As pension funds increase allocations to the real estate class, they are reducing exposure to other asset classes. In an analysis conducted by Global Market Intelligence, board members of the Pension Reserve Investment Management Committee recommended raising its private equity target by 1% and lowering its global equities target by 1% as part of the firm's efforts to increase its private market allocation investments. part. In addition, in response to market fluctuations, it lowered its global equity allocation from 50% to 42% in November 2021.
Information reference:
标签： #Retirement #Pensions #Investments #Real Estate #Categories
评论列表