CalPERS approved a commitment of up to $400 million to Aetos Capital Asia II, a real estate fund, according to a summary of the board's May 16 closed-session meeting. The board of the $194.1 billion California Public Employees' Retirement System, Sacramento, also approved commitments of up to $125 million in Blum Strategic Partners III, a corporate governance fund, and up to $100 million to City View American Fund, a real estate fund, according to the summary. All three investments are subject to negotiations.
Separately, the system plans to issue an RFP for separate pools of active international equity managers, one developed markets and the other emerging markets, given weak response to a general international equity manager earlier this year. Officials at the system recommended creating the pools after the plan received only 30 bids for active all-world ex-U.S. portfolios in the previous search, with many of the managers not qualified.
"Stock selection in developed and emerging markets requires somewhat different skill sets, and few managers have the ability and resources to be successful in both areas," wrote Michael Schlachter, managing director at Wilshire Associates, in a July 29 memo to Mark Anson, CalPERS' CIO. "The prior RFP, for an all-country world style mandate that encompassed both developed and emerging markets, made clear how few truly global, qualified managers are available."
The new pools would complement enhanced index international equity and active international equity manager pools that were approved by the CalPERS board in April. The fund's existing emerging markets managers will automatically be included in the pool. Also, staff does not plan to expand its regional mandates for Europe and Pacific Basin equities.
Size of portfolios was not specified because staff won't immediately optimize the international equity portfolio. However, most of the funding will come from CalPERS' passively managed international equity assets. Also, some of its current active international equity managers' portfolios may be reduced, according to a staff memo to the board. CalPERS had $42.2 billion invested in international equities as of June 30, of which $25.1 billion was invested passively.
The CalPERS board will vote on the proposal on Aug. 15.
