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Investing

CalPERS puts $1.26 billion in 2 in-house strategies, considering glidepath changes for DC plans

CalPERS invested close to $1.3 billion in two in-house equity portfolios and one fixed-income investment, according to a report to the board of the $349 billion pension plan.

California Public Employees' Retirement System, Sacramento, invested $1 billion in an in-house global ESG equity strategy and $260 million in an in-house synthetic enhanced equity strategy.

CalPERS also invested $25 million in a fixed-income strategy with Voya Investment Management, a high-yield portfolio that had $2.1 billion in plan assets as of June 30.

Separately, the investment committee at its April 16 meeting is expected to consider whether to change the asset allocation of the target-date funds in its $1.7 billion in supplemental income plans, which include a $1.5 billion 457 plan. The proposal under consideration would change the asset allocation of the target-date funds so that the allocations to equity and real assets would be slightly higher in the accumulation and derisking phases of plan participants' careers than the Morningstar universe of glidepaths. In a separate letter to the board, consultant Wilshire Associates noted that the glidepath recommended by staff and consultant RVK has a higher expected return and higher risk than the plans' current glidepath. CalPERS had hired RVK to help with the allocation of the glidepath.

CalPERS' investment committee is also expected to consider a new draft of its governance and sustainability principles. Staff is asking for investment feedback on its proposal to add language on sexual harassment, including a new principle on corporate culture that boards should, among other things, provide "a workplace free of sexual harassment."

However, staff is not recommending that the investment committee include targets for board diversity as requested by state Treasurer John Chiang, who is also a CalPERS board member. Mr. Chiang wanted the governance and sustainability principles to defined a diverse board as one in which at least 30% of its members are women and 30% are diverse in terms of sexual orientation and cultural and ethnic composition. In the report, staff stated that the principles do not include targets "as this could be viewed as arbitrary and limiting."