CalPERS will vote Monday on whether to issue RFPs for enhanced international index and active international equity managers. In both cases, staff at the $170 billion California Public Employees' Retirement System, Sacramento, recommended creating a "spring-fed pool" so managers can be funded at the staff's discretion. It is not clear how much will be allocated to the new managers, but most of the funding will come from CalPERS' $23.8 billion in international indexed assets run by State Street Global Advisors.
The move would be CalPERS' second into enhanced indexing. In June, the system hired 10 domestic enhanced index managers. This time, however, CalPERS will consider managers that use stock-based strategies only; in June, four of the 10 selected managers transport alpha from short bond strategies on to equity futures.
The inclusion of active international managers stems from disappointing results from CalPERS' current stable, the limited number of international enhanced index managers, and efficiency reasons, according to a staff memo to the board. Rosalind Hewsenian, managing director at Wilshire Associates, concurred with the recommendation and urged that evaluations of managers "be placed in closed session so that the investment committee can receive frank evaluations without fear that it will be picked up by the press."