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New Mexico PERA Adopts New Investment Model boosting Real Asset Allocations

 

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By David Drake

New Mexico’s Public Employees Retirement Association (NMPERA) is set to increase its real assets allocation to 20 percent from 13.3 percent. As of April 2016, the fund does not have core real estate exposure in its real estate portfolio that currently has about $581.36 million.  

According to the officials of New Mexico’s PERA, their main goal of selecting a new mix of assets was to reduce investment volatility and risk, and  increase returns. This new investment strategy is expected to reduce risks by about 72 basis points while, at the same time, upsurge returns by about 19 basis points.

The current categories of real asset allocations in the fund include liquid real estate (1 percent), illiquid real estate (7.6 percent), market neutral hedge funds (1 percent), liquid real assets (2 percent) and illiquid real assets (8.4 percent).

New Mexico’s PERA made its new asset allocation based on advice received from Wilshire Associates, their general consultants for the pension fund on investment matters. The fund plans to implement its first real estate investment project from the current asset allocation model later this year. The search for a suitable project will be headed by the core manager.

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The real-yields portfolio manager, Kristin Varela, said that the fund has not yet decided on the amount to allocate towards the real estate investment opportunity search. However, the fund is open to making investments in core funds with either an open-ended or closed investment structure.

The pension fund will not search for core funds using the traditional request for proposal format. It is working in collaboration with Cliffwater, its consultant in alternative investments, to come up with a list of suitable candidates for future consideration by investors. Along with its real estate investments, the pension fund whose assets are valued at $14 billion as of 30 April, 2016, may invest in the fields of energy, agricultural and infrastructure.

Aside from a collective pension fund, individuals planning for their retirement can take active role on how to increase his or her personal fund. Seek the advice of the pension transfer experts on these matters.

 

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