FTSE Russell has developed a property index for South Korea’s National Pension Service (NPS) to use as a benchmark for US$1 billion of equity investments.
According to the index provider, the FTSE EPRA Nareit Developed Extended Opportunities RIC 6/45 Capped Index is compiled through portfolio level screening to target the property sector and specific tenant profile exposure as determined by the pension giant.
It covers developed real estate investment trusts, and non-core and niche property companies.
The benchmark has been added to the FTSE EPRA Nareit Global Real Estate Extended Index Series index family, FTSE Russell says in a statement on May 2. But it extends beyond core sectors and has a broader range of constituent stocks.
“Dynamic approach offered by FTSE Russell allows for NPS to target specialty sector REITs, with specific and tenant exposure,” the company says. “NPS will allocate a total of US$1 billion, with growth expected upon completion of equity portfolio strategy.”
According to NPS Chief Investment Officer Won-joo Seo, the benchmark will play a “key role” in further diversifying the pension fund’s real estate portfolio.
“This index not only provides immediate access to a broader set of specialty sector opportunities but will also greatly enhance the risk-adjusted return of the entire real estate portfolio in the long run,” Seo says in the statement.
The NPS, the third largest pension fund in the world, had 920.4 trillion won ($748.3 billion) of assets under management as of December 2022.
