Luxembourg’s €14.3bn pension reserve fund is tendering real estate mandates worth €500m in an effort to reach its target allocation to the asset class.
The Fonds de Compensation commun au régime général de pension (FDC) said it was seeking to appoint two global real estate managers to the unlisted property mandates.
According to the fund’s most recent annual report, it had €247m in real estate holdings at the end of 2014, accounting for just 1.7% of assets – far short of its 8.5% target allocation.
FDC’s property portfolio to date consists entirely of domestic holdings, although the strategic asset allocation, since 2008, has allowed for 3.5% exposure to global property and 5% to domestic property.
The two €250m mandates would, if immediately invested, take FDC slightly above its 3.5% targeted global exposure, but future asset growth would rectify the overweight.
The fund decided last year to build up its global exposure through holdings in real estate funds to further diversify its portfolio and increase exposure to inflation-linked assets.
Managers are asked to submit proposals by 18 September, with a final decision expected by the end of 2015.
To date, the portfolio, which returned 10.96% last year, has largely been split between fixed income – accounting for nearly 60% of assets – and equities (38.4%).