Under the mandate, CalPERS investment staff will manage the entire international equity index portfolio, which totaled $27 billion on June 30, 2006. In February 2005, the CalPERS Board approved transferring up to half of its international portfolio from its external manager, State Street Global Advisers, to a staff-managed fund. According to a press release , the most recent move will save the $205 billion system annual fees of $1.3 million.
Internal staff currently manages $83.9 billion of CalPERS equities, or 64% of the total global equity portfolio. Under the new mandate, $97.2 billion, or 74% of all global equity assets, will be managed by the nation’s largest public pension fund.
Not only are we saving money in fees paid to external managers, but we’re hoping to generate higher returns from internal management,” said Rob Feckner, CalPERS Board President. “Since we have successfully managed our domestic equity index portfolio internally for 20 years, it’s time to do the same on the international side.”
To facilitate expanded internal management, the pension fund hired several key staff from the private sector in recent years. Christianna Wood, Senior Investment Officer of Global Equity, and four other global equity staff brought to CalPERS significant industry experience, including decades of experience in global quantitative portfolio management and trading, according to CalPERS.
At the same time, CalPERS today included 16 managers in pools that will be tapped to make portfolio investments in international fixed income and real estate equity securities, and in US global equity. “We evaluated many proposals from candidates, and these managers showed the most promise,” said Rob Feckner, CalPERS Board President. “We are counting on them for benchmark-beating returns, especially in international markets.”
The new appointments include:
- in the real estate pool will be Citigroup Property Investors, European Investors, Morgan Stanley Investment Management, Presima Inc. and RREEF America L.L.C..
- in the international fixed income group CalPERS tapped AllianceBernstein L.P; BlackRock; Brandywine Asset Management, LLC; Mondrian Investment Partners Limited; Morgan Stanley Investment Management; and Pacific Investment Management Company, LLC.
- in the pool of US Equity Active Growth Manager Spring-Fed Pool will be Goldman Sachs Asset Management; Jacobs Levy Equity Management; Marvin & Palmer Associates, Inc.; and Turner Investment Partners. Spring-fed pools have the potential for ongoing investment.
- in the US Equity Enhanced Indexing Growth Manager Spring-Fed Pool, Intech will seek broad large capital growth and large capital growth.