MBOI announces asset allocation changes

The public pension is looking to enhance and diversify their real estate portfolio.

  • Name: Montana Board of Investments
  • HQ: Helena, US
  • AUM: $23.2 billion
  • Allocation to alternatives: 36.9%

Montana Board of Investments has finalized a motion to increase its target exposure to real estate, according to materials from its December retirement board meeting.

Alongside recommendations from RVK, the adopted changes outline a 1 percent increase to target range midpoints for the asset class from 10 to 11 percent. MBOI highlights that the asset class offers both attractive returns with steady cashflows, as well as a strong diversifier to the public equity exposure in their total portfolio. The changes are in effect as of the approval of the proposal.

This change in real estate allocation is facilitated by reductions in opposing sections of the portfolio, namely a drop in domestic and international equity exposure.

In investment terms, the pension is looking to reduce its exposure to open-ended core funds, instead focusing on ‘high-conviction’ real estate managers that specialize in value-add and opportunistic strategies.

This agenda is strengthened by the pension’s latest real estate commitment, a $100 million backing of Equus Capital Partners‘ Sweet Grass vehicle, which held a final close at its $157.5 million target in November according to US Securities and Exchange Commission filings. Sweet Grass-Equus is a value-add fund that seeks to invest in the office, residential and industrial sectors across the US.

RVK acts as an investment consultant for the public pension. One of the largest fully independent and employee-owned investment consulting firms in the US, RVK provides consulting services to institutional investors including corporations, public retirement systems, Taft-Hartley funds, endowments and foundations, non-pension operating funds and high-net-worth individuals and families.

MBOI currently allocates 13.1 percent of its total investment portfolio to real estate, totaling $1.68 billion in capital. Their recent real estate commitments have tended to focus on value-add and opportunistic vehicles that have a diverse investment strategy across the US.

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