The California Public Employees Retirement System has instituted an investment policy to guide its infrastructure investments, which may include transportation, ports, energy, water and communications projects. Infrastructure was the last part of a new asset class to receive board approval, following commodities, inflation-linked bonds and forestland.

“There are vast investment opportunities in infrastructure where we can generate solid returns for our fund while supporting essential community services that are crucial to continued economic development," said CalPERS board president Rob Feckner.

California has a $500 billion requirement to enhance and develop physical structures, facilities and networks to keep up with population growth over the next 20 years. The new policy will see CalPERS commit up to 3% of total market assets to infrastructure through 2010; realize an average annual return of 5% over inflation over five years; and invest in public and

Secure agreements from investment vehicle managers that comply with the system’s responsible contractor program guidelines for fair labor practices and minimize potential adverse impacts to public employee jobs within infrastructure projects.

“Several components of our new asset class might come into play in the eventual construction of bridges, airports, utilities, water systems, and other infrastructure,” said Investment Committee Chair George Diehr. “We’re looking for long-term economic value by providing safe, reliable, efficient, and high quality services that are vital for society.”

The system had $4.7 billion in its inflation-linked asset class as of June 30, 2008, which accounts for 2% of the total fund. The pension fund will consider new infrastructure allocations in the fourth quarter of 2008.