Suffolk Pension Fund is planning a £110m investment in alternatives, including a greenfield infrastructure fund.
The pension fund, which currently has assets of £2.5bn, has around £114m available for reinvestment, and has announced plans to place money with funds managed by M&G Investments.
This includes a £60m investment in the greenfield infrastructure fund, focused on initial stage development construction, later stage development construction and expansion of long-term infrastructure.
Speaking to Room151, Paul Finbow, senior pensions specialist at Suffolk County Council, said: “We invested cash in two infrastructure funds in 2012 and because of its success, some of the money has come back earlier than anticipated.”
He said that the structure of the new fund meant that risks associated with greenfield infrastructure development have been mitigated.
“There are different ways of doing greenfield, and some of them puts some of the development risk back on the developer. This is one of those.”
The fund is also planning to allocate £25m to an illiquid credit fund and £25m into a pan-European debt fund.
Suffolk has a higher proportion of alternative investments and lower equity exposure because its fund is cash flow positive.
This, according to Finbow, means that the fund is not forced to chase higher but more risky returns through equities.
A report to the council’s pension committee in March said: “The committee believes the use of alternative assets can reduce overall volatility in the delivery of fund returns without leading to a significant reduction in overall expected return, and also improves its risk-return characteristics.”
The fund is part of the ACCESS Local Government Pension Scheme pool ACCESS pool, along with Cambridgeshire, East Sussex, Essex, Hampshire, Hertfordshire, Isle of Wight, Kent, Norfolk, Northamptonshire, and West Sussex.
The pool is currently working on a procurement process for its first pooled fund, covering passive investments.
