CalPERS staff picked seven of 14 active emerging-markets equity managers to receive onsite visits as part of the $156 billion funds plan to award assignments totaling $1 billion to $1.5 billion. Currently, the assets are passively invested by State Street Global Advisors. California Public Employees Retirement System staff recommendations are to be presented to the investment committee for the Sacramento, Calif.-based system in September, with contracts to be negotiated in November.
The seven firms are: Bernstein Investment Management and Research; Capital Guardian; Dimensional Fund Advisors; Foreign & Colonial Emerging Markets; J.P. Morgan Fleming; Rexiter; and SSgA. One target firm, Schroder Investment Management North America, withdrew because it closed its emerging-markets strategy to new clients.
In a letter to CalPERS CIO Daniel Szente, Rosalind M. Hewsenian, managing director at consultant Wilshire Associates, said the mandates should be split among at least three or four managers. She encouraged CalPERS to consider additional firms from its list of 14 because some managers J.P. Morgan Fleming, Bernstein and Foreign & Colonial have undergone a recent merger or acquisition. Also, separate vendors would have to be obtained if SSgA and DFA were picked because of CalPERS detailed reporting requirements on individual stocks, and some emerging markets managers might drop out given CalPERS tough posture on fees.