Germany's largest pension pursues timber, infrastructure

With €300m already invested in infrastructure, the €40bn Bayerische Versorgungskammer will seek more infrastructure investments as it aims for a 1.5 percent target allocation over the next three to five years. A 1 percent timber allocation also is in the works.

Timber: helping Germans
plan for retirement

The Bayerische Versorgungskammer (BVK), Germany’s largest pension fund, is seeking to award its first timber investment mandate as part of a new 1 percent timber allocation and will seek further investments in its newly created 1.5 percent infrastructure allocation.

Martin Koneberg, investment analyst at BVK, said the target allocations reflect a three to five year time horizon.

For timber exposure, which will be gained via a fund of funds strategy, BVK is just beginning to meet with potential asset managers in what Koneberg described as a “beauty contest” to pick its timber allocation manager.

Koneberg would not discuss specific plans for infrastructure, but he said that the €40 billion pension fund, which entered the asset class earlier this year with €300 million in commitments, will seek more exposure throughout 2009 and 2010 as it works toward the 1.5 percent allocation target.

He cited diversification and infrastructure’s risk-return profile as reasons the pension decided to enter the asset class. BVK had considered doing so for the last two years.