CalPERS' Mark Anson on Asset Allocation, Part 3

When you're a $170 billion public fund, it's hard not to make waves. And when the California Public Employees Retirement System (CalPERS) made a $1 billion commitment to private equity, it definitely caught the attention - and imagination - of the investment community.

In the third of our exclusive four-part series, PLANSPONSOR’s Editor-in-Chief and CEO Charles Ruffel talks with Mark Anson, CalPERS’ Senior Investment Officer for Global Equity, about the gaps in approach and style.

We had a hedge fund manager in here the other day who told us that he needs a 3% management and a 30% incentive fee. There was silence for about 30 seconds, until the manager explained that that level of fees allowed him the latitude not to raise more than a certain amount of money. But all he was really telling me was that he was in the business of fee generation, and that’s hardly the sort of approach we want to invest with.

An investment management firm that includes hedge funds in its product offering better very quickly develop an intense understanding of the level of risk it is taking on. Right now, I wonder how many of them understand that.

To Part Four of this Series