The CalPERS board approved a $500 million allocation to create an internally managed alpha incubator for global equities. The $178 billion California Public Employees' Retirement System, Sacramento, will pursue low-risk, quantitatively driven strategies that could eventually be developed into stand-alone strategies. Both long-only and absolute-return strategies will be considered.
Separately, the board approved renewing one-year contracts for the fund's two currency overlay managers. Pareto Partners overlays $5 billion in international equity assets, and State Street Global Advisors overlays $1.9 billion. In addition, CalPERS staff briefed the board on plans to revamp the fund's currency overlay strategies. Staff wants to make returns equally important as risk, to cover all asset classes, and to make more tactical bets.
CalPERS will also encourage the SEC to act on its proposed rule that would give large institutions access to the proxy amid rumors that SEC Chairman William H. Donaldson may leave his post early next year.
Sean Harrigan, outgoing president, said the fund should reach out to other pension funds and mutual funds to "encourage Mr. Donaldson to do the right thing." Mr. Harrigan, a labor leader with the United Food & Commercial Workers, said the proxy-access rule is the most important issue in corporate governance. He added that Mr. Donaldson might leave the SEC "as early as April of this coming year."
Also, the role of two other SEC supporters of the rule remains in doubt. Commissioner Harvey Goldschmid's term has expired and he plans to leave the SEC by summer; fellow Democratic Commissioner Roel Campos has been quiet on the issue, Mr. Harrigan said.
"Chairman Donaldson plans to stay around as long as he feels he is being effective," SEC spokesman Matthew Well said. Mr. Donaldson has said "he will not abide by an arbitrary timeframe" for the rule-making, Mr. Well added.
Meanwhile, California Assembly Speaker Fabio Nunez and Senate pro tem Don Peralta on Monday reappointed Mike Quevedo, vice president for the Laborers' International Union of North America, to the 13-member CalPERS board, defeating efforts by Mr. Harrigan to secure the legislative appointment. On Dec. 1, the California State Personnel Board voted to replace Mr. Harrigan as its representative on the CalPERS board with Ron Alvarado, effective Jan. 1. However, one source said Mr. Harrigan is negotiating behind the scenes to have Mr. Quevedo resign and assume his seat.