L.A. fire and police pension fund gets into REITS, looks at hedges.Invest in REITs now? The $13.2 billion Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. Fire and Police Pension System, with 12,000 pensioners, is making its first foray into Verb 1. foray into - enter someone else's territory and take spoils; "The pirates raided the coastal villages regularly" raid encroach upon, intrude on, obtrude upon, invade - to intrude upon, infringe, encroach on, violate; "This new colleague invades my real estate investment trusts--even though many on Wall Street believe that the sector has topped out. The pension group's nine-member board recently voted to set aside 15 percent of its real estate allocation to REITs. A new fund manager will be hired in early 2006 to manage $150 million to $200 million in REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). investments. "Pension funds aren't noted for their market timing skills," said Tom Lopez, chief investment officer of the Fire and Police Pension System. "Earlier boards made a conscious decision not to get involved in REITs because they weren't always the glowing success stories that they are now." The REIT investments should help diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. the pension plan's current holdings that include 17 property groups in the U.S. and co-mingled real estate funds. Over the past five years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time pension fund has thrown off an average annual rate of return of 3.51 percent. By contrast, it's been a wild ride for REITs, which as a group posted 30 percent average returns in 2004, outpacing the Nasdaq, Standard & Poor's 500 and most other benchmarks. Like other pension funds chasing better returns, the Fire and Police Pension System also is looking to invest in hedge funds hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" and will initiate a search for a new hedge fund manager next year. Lopez said the pension system's staff proposed REITs several years ago, as did their real estate consultant Townsend Group. The board also had been collecting information on hedge funds for several years before taking the plunge The term Plunge has multiple meanings:
The strategy contrasts to the California Public Employees Retirement System, which recently allocated $2.23 billion toward global real estate ventures. U.S. funds increasingly are looking overseas for higher real estate returns, especially in Europe. |
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