SACRAMENTO, Calif. - The guard is changing at CalPERS and CalSTRS.
At the $147 billion California Public Employees' Retirement System, Mark Anson last week was named chief investment officer, taking the helm after the 17-month tenure of Daniel M. Szente. The appointment of Mr. Anson, who has both a law degree and Ph.D. in finance, is expected to boost staff morale and continue the fund's tradition of moving into innovative investment areas.
Meanwhile, at the nearby $98 billion California State Teachers' Retirement System, Jack Ehnes will become chief executive officer Feb. 4. He will succeed James Mosman, who is leaving to become executive director of the National Council on Teacher Retirement in Washington.
Mr. Ehnes has been vice president of corporate affairs for Great-West Life & Annuity Insurance Co., Denver, for the past year. Previously, he had served as Colorado's insurance commissioner and had been on the board of the $31 billion Colorado Public Employees' Retirement Association, Denver, for 11 years, including terms as chairman and vice chairman.
The swift appointment of Mr. Anson at CalPERS sends a positive message to the pension fund staff, whose senior portfolio managers face a rollback of their pay hikes following a lawsuit brought earlier this year by California Controller Kathleen Connell. Ms. Connell had objected to CalPERS' setting up its own payroll system to cut checks for the 11 managers, circumventing her office. Ms. Connell won the first round in state court; the case is being appealed.
The promotion of Mr. Anson, one of four senior investment officers at CalPERS, represented an effort by the board to prevent a rumored outflow of top internal investment talent. Picking an insider also avoided the lengthy search process and learning curve that a newcomer to the complex CalPERS fund would have faced. The fact that Mr. Anson was runner-up for the CIO post a year and a half ago made a speedy selection possible.
"I think his biggest challenge ... is keeping the staff together," said Mr. Szente, who now is chief investment officer of McMorgan & Co., a San Francisco money manager. Mr. Anson's appointment "will go a long ways toward doing that. (He) is well-liked and well-respected," Mr. Szente added.
After Mr. Anson made a typically low-key response to the announcement, CalPERS Chief Executive James Burton interjected that Mr. Anson "was excited too."
And Michael Flaherman, chairman of the investment committee, made a joking reference to how long a job commitment CalPERS is seeking from Mr. Anson, saying the CalPERS board "will have plenty of opportunity to review (issues) over the next several years - a minimum of five."
As senior investment officer, Mr. Anson already oversaw all of CalPERS' domestic and international equity programs, which comprise a majority of fund assets. He also oversees its infant hedge fund program, currency overlay program, domestic long/short program, corporate governance, cash management and manager development program.
Prior to joining CalPERS, Mr. Anson was a portfolio manager at OppenheimerFunds Inc., an options dealer at Salomon Brothers Inc. and an attorney specializing in securities and derivatives regulation.
He earned his law degree from Northwestern University School of Law in Chicago, where he served as executive and produ ction editor on the law review. Later, he received his master's and Ph.D. in finance from the Columbia University Graduate School of Business, New York. Mr. Anson also got a bachelor's degree with distinction with a double major in economics and chemistry from St. Olaf College, Northfield, Minn.
Mr. Anson's latest book, "The Handbook of Alternative Assets," will be published early next year. He also has written two books on derivatives and 30 articles on risk management, alternative investments and portfolio management.
While nobody questions Mr. Anson's investment and academic credentials, his biggest challenge will be dealing with the fractious politics on the CalPERS board. Both Treasurer Philip Angelides and Ms. Connell have advanced a number of proposals that steer CalPERS' assets into supporting social goals such as investing in underserved areas in California, providing affordable housing, restricting investments in emerging markets with poor human rights records, and divesting tobacco-related stocks.
Ms. Connell has been particularly divisive on the board, although her term as controller - which affords her a board seat - will expire late next year.
The presence of San Francisco Mayor Willie L. Brown Jr. as a trustee adds a master political dealmaker to the mix, but one who carries his own political agenda.
The elected members also have been divided. A feud between board President William D. Crist and Charles P. Valdes, former investment committee chairman - formerly political allies - continues to simmer. Mr. Valdes was just re-elected to a four-year term.
Meanwhile, Mr. Anson will continue to face a difficult investment environment. In the near term, he will oversee CalPERS' shift of between $1 billion and $1.5 billion to actively managed emerging markets managers, from a passively managed portfolio run by State Street Global Advisors. Finalist interviews are slated for Jan. 9 to 11, with selections set for February. In addition, CalPERS' $19 billion passively managed international equity portfolio, also managed by SSgA, is up for bid.
Mr. Anson also will put his stamp on CalPERS' well-publicized move into hedge funds. With the help of outside adviser Blackstone Alternative Asset Management, New York, the fund is expected to invest $1 billion in the area. That figure might grow to between $3 billion and $5 billion if the program proves successful.
At CalSTRS, Mr. Ehnes faces a much more low-key board and a different type of challenge in managing the 525-employee CalSTRS staff.
As chairman of the Colorado PERA board for four years, Mr. Ehnes dealt with both investment and benefit issues, but he was better known for his work on the benefits side. During his tenure, the fund introduced a hybrid plan. It also developed a variable matching payment for its defined contribution plan, known as the "Matchmaker," which was a leader among public pension funds.
In his new role, Mr. Ehnes said he will focus on "delivering successful investment performance as well as service to the beneficiaries."
Mr. Ehnes has won numerous awards, including the 1992 "State of Colorado Manager of the Year" award, and has served on national insurance task forces. A Rochester, N.Y., native, Mr. Ehnes earned a B.S. from Cornell University, Ithaca, N.Y., and a master's from Vanderbilt University, Nashville.