The largest U.S. public pension fund said it plans to sell up to $3 billion in real estate, the latest effort by the California Public Employees' Retirement System to reduce costs and simplify its portfolio.

The move follows an announcement earlier this month that the Sacramento-based pension fund intends to sever ties with roughly half of the outside firms handling its money.

The fund, or known by the abbreviation Calpers, said in a news release that the decision to sell up to $3 billion in real estate is the first move under that plan, which involves the reduction of roughly 100 external investment managers by 2020.

Calpers said Park Hill Group has been picked to help with the new real-estate sale, which includes U.S. and international holdings.

Calpers currently has $25.5 billion in commercial, industrial and residential assets.

Write to Timothy W. Martin at timothy.martin@wsj.com

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