The California Public Employees鈥� Retirement System (CalPERS) has established a 鈥榟armonised鈥� real assets strategic plan for the next five years.
The $293bn (鈧�259bn) pension fund said the plan largely continues the investment goals and parameters of its existing real estate, infrastructure and forestland programmes, but increases harmonisation while reducing risk and complexity.
鈥淭he unifying elements of this strategic plan will make the asset class less complex to manage, and make reporting more transparent,鈥� said Paul Mouchakkaa, managing investment director for real assets.
CalPERS has been evaluating its approach to real assets for the past year as it looks to reduce risk, costs and complexity.
鈥淭his strategic plan builds on the tremendous work done to rebuild the programme after the mortgage meltdown and financial crisis,鈥� said Henry Jones, CalPERS board vice president and investment committee chair.
鈥淩eal assets is a vital part of the CalPERS portfolio and this plan will keep it on the right track for the next five years.鈥�
The plan also outlines ESG integration goals for the next five years, including manager expectations, risk assessment, and research.
Real assets benchmarks, the role of the fund鈥檚 forestland programme and real assets allocation will be examined next year.
The pension fund will continue to focus on high quality core assets primarily in US markets through separate accounts, while increasing its monitoring of leverage, with 55% as its limit.
CalPERS has put a hard cap on development opportunities. A 鈥榖uild-to-core鈥� strategy will make up to 10% of its real estate portfolio, as .
It also confirmed it would go ahead with a pilot real estate programme to create real estate mandates where no leverage is used. Details of the pilot and a timeline for implementation are yet to be determined.
