Move over CalPERS, you have company in the $100 billion pension fund stratosphere.
The New York State Common Retirement Fund has become only the second U.S. defined benefit pension fund to attain that milestone. Its assets now are closer to $105 billion, according to a report issued April 28 by H. Carl McCall, sole trustee.
The California Public Employees' Retirement System, still the biggest U.S. defined benefit fund, rose to $140 billion as of April 28, up from $135.8 billion as of March 31, according to a spokesman.
A few other U.S. defined benefit funds are approaching the $100 billion level. The next largest, in order of size, according to officials at the funds, are:
* California State Teachers' Retirement System, with $86.5 billion as of March 31;
* Florida State Board of Administration pension fund, $81.2 billion as of March 31;
* New York State Teachers' Retirement System, $75.9 billion as of March 31;
* General Motors Corp., $72.3 billion as of Dec. 31;
* Teacher Retirement System of Texas, $71.7 billion as of April 24; and
* New Jersey Division of Investment, $65 billion as of April 29.
The Texas Teacher fund expects to reach $100 billion in 2001, said Patricia Cantu, executive assistant. "These are conservative forecasts," said Ms. Cantu. "We are already ahead of our forecast," which projected the fund to be at only $69 billion now.
Roland M. Machold, director of the New Jersey division, said the fund was projected to reach $65 billion in 2000. "We're obviously ahead of that now," Mr. Machold said.
Officials at the other funds either had no estimate or declined to disclose a projection of when their fund is expected to reach the $100 billion mark.
Mr. McCall credits the domestic bull market with fueling the rise in assets at New York Common.
For the fund's fiscal year ended March 31, Mr. McCall noted its two largest components -- domestic equities and fixed income -- returned 47.2% and 15.6%, respectively.
In terms of performance, in 1997 the New York fund bested CalPERS and the median public and corporate fund in the Trust Universe Comparison Service data, compiled by Wilshire Associates Inc., Santa Monica, Calif. (See graphic on page 1 for performance details.)
In the eight calendar years back to 1990, the New York fund's return outperformed that of CalPERS in six of the years.
The New York fund also outperformed the TUCS public fund median in six of the years, although not always the same ones.It outperformed the TUCS corporate fund median in four of the years.
In terms of allocation, the New York fund had 49.7% in domestic equities, 8.1% in international or global equities, 2% in emerging market equities, and 0.2% in global equities as of March 31.
CalPERS has a higher total equity allocation, although a lower domestic equity allocation, than the New York fund. CalPERS had 46% in domestic equities and 19.3% in international equities as of Feb. 28.
New York Common's equity allocations are at the highest they have been in all equity classes, at least in recent years, according to fund data. The New York fund's equity allocations have risen gradually since March 31, 1995, when domestic equities were at 46.4%, international equities, 7.3%, global equities at 0.2% and nothing then in emerging markets.
By contrast, TUCS data show, as of Dec. 31, the allocation of the median public fund was 58.2% in equity and 31.6% in fixed income. Both figures include domestic and international. The data represents 48 public pension funds.
The median corporate fund allocation was 61.9% in equity and 27.3% in fixed income, according to TUCS. That number represents 137 corporate funds. The TUCS data have no breakdown of domestic and international equity allocations.
New York Common is more passively managed than CalPERS, although both have committed about the same percentage of assets to internal management.
The New York fund had $73.3 billion, or 70%, of its assets invested passively, as of March 31. The fund's passive investments consisted of $38.487 billion in domestic equity, $1.538 billion in international equity, and $33.285 billion in fixed income as of that date. The passive bond portfolio represents almost all of its total $34.8 billion in fixed-income investments.
CalPERS, by contrast, indexes a little more than half of its assets. The fund had $72.9 billion indexed investments as of Feb. 28. That consisted of $55.4 billion in domestic equities and $17.5 billion in international equities.
The New York fund managed two-thirds of its assets -- $69.686 billion -- internally as of March 31. It managed in-house $34.838 billion in domestic equities, $33.285 billion in fixed income, and $1.563 billion in short term.
CalPERS invested $86.9 billion, or about 64% of its total assets, internally as of Feb. 28. Its internally managed assets included the $55.42 billion in indexed domestic equities and also $31.5 billion in active domestic bonds. All of its domestic bonds are managed in-house. It managed no international stocks or bonds in-house.
In terms of management and oversight differences, Mr. McCall, the elected state comptroller, is the sole trustee of the New York fund.
CalPERS, on the other hand, is overseen by 13 trustees. Some trustees are elected officials, serving ex-officio. Three are appointed by the governor. One is appointed jointly by the speaker of the California Assembly and the State Senate Rules Committee. Others are elected by all members of CalPERS, unions or other constituencies.
The New York fund, as of March 31, used 30 external managers for equity and fixed-income investments, some of which had several different portfolio strategy assignments. In addition, as of Sept. 30, the New York fund used 23 real estate equity managers and 36 alternative investment managers.
CalPERS uses 28 external equity managers. In addition, it uses 11 real estate equity managers, three currency overlay managers and two global tactical asset allocation managers. It invests in 90 partnership, monitored by two outside consulting firms and in-house staff.
As big as the New York State Common and CalPERS funds are, together the two funds could not buy General Electric Co., the largest company in terms of market value in the U.S. stock market. As of March 31, GE's market value was $282.1 billion.
But they could buy Microsoft Corp., the next biggest U.S. stock, whose market value was $217.9 billion. They would have more than enough leftover to buy Netscape Communications Corp., whose market value was about $2.5 billion, although Janet Reno might want to review those acquisitions.