CalPERS Looks into Infrastructure Investments

September 11, 2007 ( - The California Public Employees' Retirement System (CalPERS) is embarking on a $2.5 billion pilot infrastructure program focused on creating an inflation-linked asset class.

According to a press release , the infrastructure program will look at investment opportunities in the construction of roads, bridges, airports, utilities, water systems and other projects.

“We hope to generate stable, attractive investment returns with low to moderate risk as we deploy capital to meet a reported need of $1.6 trillion for U.S. infrastructure projects over the next five years,” said Rob Feckner, CalPERS Board President, in the press release. “These pilot programs are our first step toward recognizing that opportunity and a step toward further diversifying our portfolio.”

CalPERS wants to reclassify $573 million of existing investments from private equity, real estate and fixed income and place them in the provisional new asset class, according to the press release.

According to Charles Valdes, Chairman of the Investment Committee, the new asset class will:

  • act as a hedge against inflation,
  • enhance diversification,
  • give CalPERS a bigger net in the market,
  • reach across private equity, fixed income, and real estate sectors, and
  • make the pension fund a major player in solving some pressing public policy problems related mainly to energy and transportation.