CalPERS staff proposed launching a $5 billion national credit-enhancement program that would provide backup for municipal bond issuers. The $134 billion California Public Employees Retirement System, Sacramento, would also play a leading role in forming a consortium of public pension funds to provide credit enhancement nationally.
The proposal, to be considered by CalPERS investment committee Feb. 18, would help municipalities lower interest payments while creating $17.5 million in annual fee income for CalPERS. The $92 billion California State Teachers Retirement System has run a similar program since 1994 that stands behind California issuers only.
Separately, CalPERS staff at the June investment committee meeting will recommend boosting its $1 billion allocation to hedge funds by an undetermined amount. CalPERS has handed out $550 million to 13 hedge fund managers; the latest additions are a $25 million allocation to Lansdowne Partners, a long/short European equity manager, and $25 million to Matador Capital Management, a bottom-up U.S. equity hedge fund.
Also, staff wants to create a "spring-fed pool of strategic advisers to aid CalPERS in running its absolute-return program, according to the systems website. Current adviser Blackstone Alternative Asset Management, whose contract expires June 30, would be included in the pool. Staffers also want to hire State Street International Fund Services to provide improved transparency and risk analysis.