CalPERS staff will recommend in June that the $134 billion fund boost its $1 billion allocation to hedge funds by an undetermined amount. So far, it 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.
In addition, staff wants to create a "spring-fed pool" of strategic advisers to aid CalPERS in running its absolute-return program, according to the system's 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.
Separately, CalPERS wants to sell a minority stake in its $900 million core retail mall program to manager Miller Capital Advisory, to better align Miller's interests with those of the pension fund.
CalPERS also is negotiating a $200 million investment in a European corporate-governance fund being established by Knight Vinke Asset Management, a new firm being formed by Eric Knight and his team from Sterling Investment Group, and French banker Edouard Stern of IRR Capital. A summary of CalPERS' Dec. 16 closed session also said the pension fund is seeking to take an equity stake in the firm. CalPERS officials declined to provide additional information.
S. Carolina eyes equities
The South Carolina Retirement Board System may raise its equity exposure to 32.5% of total assets by April 1, from 30%, said Michael Sponhour, spokesman. The investment panel of the South Carolina Budget and Control Board, which oversees the $20 billion system, recommended the move. Funding will come from reducing fixed income to 67.5%, from 70%. The assets will be allocated to existing equity managers, he said.
Company stock limit urged
A report on Enron Corp. released by the Joint Committee on Taxation on Feb. 13 urged Congress to impose legal restrictions on the amount of company stock held in defined contribution plans. "Absent legal restrictions ... situations such as Enron's may occur again," the report warned.
The report acknowledged the restrictions "would involve a major policy change from present law." The report also recommended, among other things, that plan sponsors not be permitted to require employee elective deferrals or after-tax contributions be invested in employer stock.
Pa. funds file objections
The $21.3 billion Pennsylvania State Employees' Retirement System and the $38.3 billion Pennsylvania Public School Employees' Retirement System filed preliminary objections to a lawsuit filed by Robert P. Casey Jr., Pennsylvania auditor general. The filing in state court stated Mr. Casey has "significant disabling conflicts of interest" that would make it impossible for him to objectively review the performance of the funds' investment managers.
Mr. Casey last month went to court to force the plans to be audited by the auditor general's office at the funds' expense. The audit would focus on outside investment managers.
Fund officials say Mr. Casey has no legal authority to conduct an audit without their permission; he is forcing the plan's trustees to give him a "blank check" to cover the audit's cost; and he has significant conflicts of interest because he has accepted hundreds of thousands of dollars in campaign contributions from some of the funds' investment managers.
Alaska reviews asset mix
The $11 billion Alaska State Pension Investment Board will review its asset allocation at its March 17-18 meeting, said Gary Bader, CIO. He does not expect major changes in the policy asset mix, but has not yet decided on his recommendation. Consultant Callan has submitted a study to the system. The current policy mix is 40% domestic equities, 17% international equities, 31% domestic fixed income, 3% international fixed income and 9% real estate.
Alan Bond sentenced
Alan B. Bond, former president of Albriond Capital Management was sentenced to 12 years, seven months in federal prison for defrauding institutional clients and accepting bribes from brokerage firms. He was sentenced in U.S. District Court in New York on Feb 11; he also was ordered to pay $6.6 million in restitution and a $36,000 fine.
In-state funds sought
The $10.5 billion New Mexico State Investment Council is searching for venture capital and private equity firms that will establish offices or launch new funds focusing on investment opportunities in the state, said Greg Kulka, alternative investments portfolio manager. The council plans to commit at least $70 million, or about $10 million to each manager. The council is especially interested in pre-seed, seed and early stage venture investors with expertise in commercializing technology developed in laboratories and state universities, Mr. Kulka said. There is no timetable; no RFPs have been issued. Pacific Corporate Group is assisting. Assets for the investments will come from an internally managed domestic core bond portfolio.
As part of the initiative, the council committed $10 million to Blue Sage Capital, which focuses on growth-oriented companies and will open an office in New Mexico.
Fund may leave PRIM
The $88 million Weymouth Retirement System is considering withdrawing from the $26 billion Massachusetts Pension Reserves Investment Trust, overseen by Mass PRIM. Weymouth is the state fund's largest member.
Shareholder proposals soar
More than 850 shareholder proposals have been filed so far this year at publicly traded U.S. companies, according to a report by the Investor Responsibility Research Center and Interfaith Center on Corporate Responsibility. Corporate governance resolutions submitted as of Feb. 1 totaled 625, compared with 529 in all of 2002. Executive pay issues are the most common focus of this year's shareholder resolutions, accounting for 44% of all governance proposals.
Merrill gets the nod
DaimlerChrysler's Market Center will offer a bundled 401(k) program by Merrill Lynch Retirement Group to the automaker's 4,300 dealers, said Brad Remer, supplier development at the market center.
Merrill is record keeper and plan administrator for the program, which offers investment options from both Merrill and outside managers, Mr. Remer said. The market center arranges product and service contracts with outside vendors for dealerships. Merrill is the semibundled provider of DaimlerChrysler's $4.3 billion 401(k) plan.