The California Public Employees' Retirement System recently bought a stake in a private Indiana toll road with a troubled history, one sign of how popular infrastructure investments have become among U.S. pension funds.
In May, CalPERS bought a 10 percent stake of the road's concession, representing the first U.S. transportation investment for the nation's largest public pension fund. The Indiana Toll Road had been acquired out of bankruptcy in 2015 for about 50 percent more than its original 2006 price by a fund made up of more than 70 U.S. pension plans.
Infrastructure — such as roads, bridges, rail, airports, water storage, utilities, and pipelines — has long been favored by pension funds in Canada, Australia, and the United Kingdom. Now, as an era of strong returns in stocks and bonds is believed to be winding down, more U.S. public pension funds are looking to buy real assets for their portfolios, seeking cash-generating, stable investments in a low-interest environment.