SACRAMENTO, Calif. — Fidelity and Vanguard executives needn't lose any sleep over the prospect of CalPERS competing with them.
While the idea of an 800-pound gorilla entering money management might strike fear in the hearts of industry professionals, in reality the $228.7 billion California Public Employees' Retirement System, Sacramento, is years away from offering investment strategies to defined contribution plans and individual investors—if ever.
CalPERS officials floated the idea at a Jan. 22 off-site board meeting of creating unitized pools of its investment strategies, and potentially opening them to outside investors. The concept has created a stir among money managers.
According to Chief Investment Officer Russell Read, CalPERS could develop two types of investment products: core funds that invest in broad asset classes, including equities, bonds and REIT strategies; and "goal-oriented" funds, including the entire CalPERS main fund or subsets, asset allocation, target-date, socially responsible and inflation-protection funds.
Several other public pension funds are looking at unitizing their defined benefit holdings to make them available to their own defined contribution plans (Pensions & Investments, Jan. 22). But CalPERS is believed to the first public fund interested in marketing those unitized portfolios to a broader marketplace.