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Chicago pension invests $50m, raises infra allocation

Along with making its fourth infrastructure investment, Chicago Policemen’s Annuity and Benefit Fund has increased its target allocation to the sector from 2% to 4%.

The Chicago Policemen’s Annuity and Benefit Fund has approved a $50 million allocation to the Ullico Infrastructure Fund as it looks to generate inflation-linked yield and diversify its portfolio.

Aiofinn Devitt, the pension’s chief investment officer, told Infrastructure Investor that “the main attraction for infrastructure for us is it is generally inflation-linked yield,” adding that the investment would also help diversify Chicago Policemen’s $2.5 billion portfolio. The pension’s board also approved a resolution to increase infrastructure allocations from 2 percent to 4 percent.

The $274 million Ullico Infrastructure Fund, managed by Washington DC-based Ullico, a labour-owned insurance and investment company, is open-ended and has a 1.75 percent flat management fee with no hurdle, Devitt said.

Chicago Policemen’s previous infrastructure investments include $35 million committed to Global Infrastructure Partners’ first fund, GIP I, in 2006, as well as $25 million pledged to Carlyle Infrastructure Partners in 2007. It also invested $25 million in GIP III, which closed last week on $15.8 billion, making it the largest infrastructure fund ever raised.

The pension will continue to target infrastructure and real estate through funds, Devitt said. Chicago Policemen’s has not met its 4 percent target allocation for infrastructure yet, she added, and there aren’t plans at the moment for another investment this year.

“We don’t have to get our target right away,” Devitt said. “Basically, the issue right now is a lot of infrastructure exposure is global, and we’re worried about the impact of currency on some of these holdings.”