Pennsylvania PSERS cuts real estate allocation by 1%
Investors - SEPTEMBER 25, 2017

Pennsylvania PSERS cuts real estate allocation by 1%

by Jody Barhanovich

The $52.7 billion Pennsylvania Public School Employees’ Retirement System is lowering its allocation to real estate to 11 percent from its previous 12 percent, according to Evelyn Tatkovski Williams, press secretary for the pension fund. The new allocation becomes effective Oct. 1, 2017.

PSERS’ long-term real estate target is currently 10 percent with 8 percent to private real estate, according to the pension fund.

“PSERS has been working to lower the allocation to real estate since the end of the Great Recession,” said the pension fund. “PSERS was and still is overallocated against its long-term targets. The new allocation change is just a step in that direction.”

PSERS has an actual allocation to real estate of 11.5 percent. Despite the overallocation, the pension fund is still planning to invest additional capital into real estate. “PSERS will be focused on re-ups with existing managers at this time,” said PSERS.

As of March 2017, its real estate portfolio was valued at approximately $5.91 billion.

In other news, PSERS reported a return of 8.42 percent for the fiscal-year-to-date period ended March 31, 2017, and added $3.7 billion in net investment income to the pension fund, tracking above PSERS’ annual earnings assumption of 7.25 percent for the full year.

“The markets have continued to perform well since the end of March, pushing returns further above the fund’s annual earnings assumption,” said James Grossman Jr., PSERS’ CIO. “While a difficult pension funding issue remains for school employers and the Commonwealth due to legacy debt issues, PSERS remains hopeful that the fund will have a positive fiscal year above the annual earnings assumption.”





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