CalPERS committed up to $320 million to three buyout funds as part of its alternative investment program. The $157 billion fund already had $10.2 billion committed to the area as of June 30.
The funds board also adopted a sweeping series of changes to its $36.3 billion in international investments. In alternative investments, the fund committed $150 million to Texas Pacific Groups TPG III fund, which will invest in technology/telecommunications, branded products, utilities, health care and special growth situations in Europe. It also committed up to $70 million to Littlejohn Fund II, which is seeking to raise $400 million to $600 million for buyouts of underperforming companies in the middle market. And another $100 million was committed to a private equity fund being raised by Mountain Capital, a new firm that will invest 70% to 80% of its capital in communications firms and the remainder in the education sector. For international investments, the board approved a more flexible approach. Passive investments will range between 60% and 75% of the funds $30.7 billion in international stocks, while actively managed foreign stocks will range between 25% and 40%. Currently, the split is 75% passive and 25% active. The fund also will consider adding enhanced indexing or other lower risk and moderate return strategies, and will consider qualified firms that dont fit into rigid categories.
On the international fixed-income side, the staff will research creating a small internally managed currency overlay program in addition to existing currency overlay programs.Searches for international equity and bond managers will start in the fourth quarter, but an indexed contract with State Street Global Advisors will be renewed for another year.