Russell Read, CalPERS' new CIO, thinks the giant fund can take advantage of new investment opportunities if oil prices remain above $70 a barrel.
"It's the elephant in the investment room that … has implications across stocks, bonds and, of course, commodities markets," said Mr. Read, who on June 1 will start his new job at the $208.3 billion California Public Employees' Retirement System, Sacramento.
In an interview with Pensions & Investments, Mr. Read suggested he might lead CalPERS in a number of directions as chief investment officer of the nation's largest pension fund. Among the top candidates:
• Alternative and traditional energy sources. CalPERS can use its huge size to access the best ideas and implement them, he said.
• Commodities. At OppenheimerFunds Inc., New York, Mr. Read introduced the first commodities-based mutual fund in 1997. CalPERS plans to conduct a trustees' workshop on investing in commodities in coming months.
• Natural resources. Mr. Read has a personal love of trees, including a 500-acre hardwood forest in Maine that he planted in line with pre-colonial plantings. But he said CalPERS' return to timber would have to be reviewed at the total portfolio level.
• Asset-liability management. Mr. Read can leverage his background as an actuary and the expertise he gained helping run Prudential Insurance Co.'s vast guaranteed investment contract portfolio in the late 1980s.
• Risk management. Mr. Read and Mark Anson, Mr. Read's predecessor at CalPERS, jointly built OppenheimerFunds' risk management system before becoming portfolio managers. Mr. Read also represented Oppenheimer when the Investment Company Institute helped develop best practices for the mutual fund industry in 1994, averting Securities and Exchange Commission regulation of use of derivatives following losses incurred by several Minneapolis-based Piper Capital Management Inc. bond funds.