Montana Board of Investments to increase real estate allocation

The ​​Montana Board of Investments (BOI) is planning to increase its target allocation to real estate from 9 percent to 10 percent, according to a recent meeting document.

The pension fund is also planning to reduce the midpoint of core fixed income from 15 percent to 14 percent, and increase the midpoint of noncore fixed income from 6 percent to 7 percent.

Montana BOI said, at this time, the real rate of return is negative, resulting in a loss of purchasing power for money invested in core fixed income. Noncore fixed income is expected to have a higher return than core fixed income over the long term. Staff have been reviewing additional strategies, which will likely move the allocation to 7 percent over the next year.

The pension fund said real estate typically offers steady cash flows and is expected to generate a higher rate of return than core fixed income. Similar to core fixed inc