CalPERS’ staff made the recommendations following a November meeting of the System’s investment committee that approved the hiring of active emerging markets managers to handle investments of $1 billion to $1.5 billion.
Currently, CalPERS’ emerging market assets are all passively managed by State Street Global Advisors.
After reviewing 69 completed questionnaires, the following firms made the recommended list:
- Alliance Capital Management LP
- Bernstein Investment Management and Research (Alliance)
- Capital Guardian Trust Company
- Deutsche Asset Management
- Dimensional Fund Advisors
- Foreign & Colonial Emerging Markets Ltd.
- Genesis Asset Managers Ltd.
- Grantham, Mayo, Van Otterloo & Company LLC
- JP Morgan Investment Management Inc.
- Putnam Investments, Inc.
- Rexiter Capital Management Ltd. (SSgA)
- Schroder Investment Management North America, Inc.
- State Street Global Advisors (SSgA)
- Templeton / Franklin Templeton Institutional
- Wellington Management Company, LLP
However, Dimensional Fund Advisors, Grantham, Mayo and State Street Global Advisors may fall off the final list due to their quantitatively oriented investment process, which would require the incorporation of an outside consultant in order to address labor and corporate social responsibility factors at the company level to CalPERS’ satisfaction.
If approved by the board Monday, the firms will receive solicitation documents this month, with final selections scheduled for November. A proposed copy of the document is at http://www.calpers.org/whatshap/calendar/board/invest/200104/Item06a-02.doc.
CalPERS’ decision to move the entire emerging markets portfolio from passive management to active will cost the $160 billion fund about $11.8 million in transaction costs (65 basis points), according to CalPERS staff. However, they expect this one time cost to be recouped by ” active managers’ outperformance of the benchmark, net of fees, over time.”
– Nevin Adams email@example.com