Californian pension fund CalPERS could double its real estate portfolio and increase its assets under management in the sector by around $30bn.
Speaking at Eastdil Secured’s 50th birthday celebration in New York last week, the $300bn (£240bn) fund’s chief investment officer Ted Eliopoulos said the investment giant could dramatically up its current allocation due to the diversifying element it provided to its equities- and bonds- heavy portfolio and its strong yielding nature.
Interviewed by Eastdil’s chief executive Roy March, Eliopoulos said that in looking to make more investments, it would remain “disciplined on risk profile”, continuing to concentrate on core and core plus opportunities and in particular target the office and multi-family housing sectors.
Without explicitly referencing the election of President Trump and the decision by the UK to leave the European Union, he said that political turmoil around the world had increased the possibility of more dramatic returns, both positive and negative.
“The question now, with the amazing changes across the globe, both good and the worrying, is how that will translate to the investment return environment and how that will change the portfolio construction and the business model for a large pension fund like ours. It really poses the most challenging time for us. The tail for both the positive and negative have grown and the base case, the centre, has shrunk,” Eliopoulous said.
“The prospect for much stronger and much more beneficial returns has grown but so has the tail risk with some of the policies around the globe in terms of protectionism and other events and that makes our job really difficult. How do you position a portfolio for both growth, inflation and deflation? The truth is you can’t. You have to place some bets.”
Read an interview with Eastdil’s chairman Ben Lambert in next week’s Estates Gazette.
Inside Eastdil’s 50th birthday party >>
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