DECEMBER 19, 2013

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Florida to up real estate allocation

by Reg Clodfelter

At a recent board meeting, the Florida State Board of Administration voted to up its target allocation to real estate from 7 percent to 10 percent. The change will facilitate an increase of approximately $4 billion in capital.

The 3 percentage point increase will be taken from a 6 percentage point decrease in target allocation to fixed income, reducing it from 24 percent to 18 percent. “The board was concerned about interest rate risk in fixed income,” comments Dennis MacKee, director of communications for the board, “and decided to reallocate assets across the other asset classes to mitigate this risk.” The board had invested 21 percent of its portfolio in fixed income and 7 percent in real estate, as of September 2013.

Though the pension fund will use the new capital for a variety of investment strategies, board documents state that the additional capital will be used to take a

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