The California Public Employees’ Retirement System has unveiled a plan to increase its allocation to infrastructure over the next two years, setting its infrastructure allotment to 3 percent, or $8.2 billion (€5.5 billion) of its assets.
According to a statement by CalPERS, the firm’s objective is to achieve an average annual investment return of 5 percent over the rate of inflation, net of fees, over a five-year period.
The firm currently has $461 million invested in infrastructure assets through its private equity and its real estate allocations. Investment committee chair George Diehr said in a statement that the new asset allocation will target construction of bridges, airports, utilities, water systems and other infrastructure. The CalPERS infrastructure investment program was initiated by Russell Read, who recently left as the fund's chief investment officer to start an environmental investment firm.
Not all of the employees which CalPERS represents were thrilled with the news. A group representing engineers employed by the state of California said on Wednesday it would sue Calpers to block it from investing in public-private infrastructure projects. The 13,000-member Professional Engineers in California Government says that such partnerships would threaten public sector jobs.
The firm may look to infrastructure projects in Asia, as it has also been recommended that the firm increase its allocation there. Last week investment staff at the pension recommended allocating up to 20 percent of the fund’s real estate pot, valued at $23.6 billion, to emerging markets over the coming decade – with China and India among the favored countries.