The Los Angeles Fire and Police Pension System, with about $15.7 billion in assets, is allocating about $785 million for commodities, its first investment in the asset class.

The fund will allocate 5 percent of its money over a two- year period for investments including commodity-related futures, stocks and private equity, Tom Lopez, the fund’s chief investment officer, said in a telephone interview from Los Angeles. The private-equity portion is already being invested, he said.

Investing in commodities “is simply an additional diversifier for the fund,” Lopez said. “It provides some inflation protection, and the expectation is for a return close to equities.”

The pension system’s board of directors made the decision to allocate a portion of the fund to commodities in December 2010, Lopez said. In September, the board started reviewing investment options for raw materials, he said.

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net