Infra best performer in CalPERS’ real assets portfolio

The asset class has generated a net return of 9.9% over the last year, with GIP II its top performing fund, returning a net 15.88%.

Final figures released last week for the 12 months ending 30 June show infrastructure has consistently outperformed other real asset classes in the $323 billion California Public Employees’ Retirement System’s portfolio.

Amounting to $3.77 billion of its $36.29 billion real assets portfolio, infrastructure returned a net 9.92 percent last year, besting the net 7.60 percent returned by real estate, which makes up 84.1 percent of the real assets portfolio. Forestland, with $1.98 billion, rounds out the portfolio.

 

Infrastructure’s final year-to-date return outperforms the asset class’s benchmark – a target of CPI plus 4 percent, with a one-quarter lag – by 345 basis points. At year five, that outperformance grows to 561 basis points.

The infrastructure portfolio amounts to 1.2 percent of CalPERS’ total assets, with an interim target, set last October, of 2 percent. It comprises 13 commitments spread across funds, separate accounts and other vehicles.

CalPERS’ commitment to Global Infrastructure Partners’ second $8.25 billion infrastructure fund – currently worth $243 million – is generating the best returns among the blind pool funds it has committed to, earning a 15.88 and 20.10 percent net return over one and three years, respectively. Its largest commitment – currently worth $808 million – is to a separate account managed by power specialists Harbert Management Corporation, returning a net 18.29 and 5.90 percent over one and three years respectively.

Paul Mouchakkaa, CalPERS’ managing investment director for real assets, told Infrastructure Investor in a previous interview that the pension will seek to grow its infrastructure portfolio by taking stakes in private assets, rather than gaining exposure through listed infrastructure or infrastructure debt.

The pension also invests through a number of separate accounts, notably some with Australian and global mandates. Future commitments could see it target new geographies, such as Europe, Mouchakkaa said. “We use funds to target specific sectors or geographies. It’s always a question of timing.”