SACRAMENTO, Calif. CalPERS officials are overhauling the funds $539 million 457 plan.
The revamp increases to five from three the number of internally managed investment options the 457 plan will offer to participants. The changes also alter external managers for several portfolios, close some options, and add five new target-date funds that will be run by State Street Global Advisors, Boston.
The new fund lineup is expected to reduce fees by 10 basis points on average, according to a staff memo to the board.
And officials at the California Public Employees Retirement System, Sacramento, are not done. Still in the works are requests for proposals for active domestic small-cap to midcap growth and value equity strategies. Both will be new options for the plans. Details on the RFPs are not yet available, according to CalPERS spokesman Brad Pacheco.
The staff also plans to add new funds based on asset classes in CalPERS $229 billion defined benefit plan, according to a memo from Andrew Junkin, managing director of consultant Wilshire Associates Inc., to CalPERS CIO Russell Read. Staff and Wilshire officials are considering a high-yield bond fund, a real estate investment trust fund and a fund that would mimic the performance of the entire defined benefit plan, Mr. Junkin wrote.
Meanwhile, several investment options will be mapped into new investment options or will have their managers changed. The mapping is slated to take effect May 7.
In fixed income, an internally managed money market fund, with $30.4 million in assets, will be closed and mapped to an SSgA-managed stable value fund, which currently runs $73.1 million in CalPERS 457 plan assets. Also, an internally managed mid-duration bond fund, with $24 million, will be mapped to a new total return bond fund, also run by CalPERS. An internally managed Treasure Inflation Protected Securities fund also will be added.
In domestic equities, a $34 million active domestic large-cap growth stock portfolio run by SSgA will be mapped to a similar strategy run by Turner Investment Partners. Also, a new active domestic large-cap value option run by Alliance Bernstein will be added. In addition, a $44.7 million small-cap Russell 2000 index fund managed by SSgA and a $49.2 million active domestic small-cap growth fund run by Brown Capital, whose contract will shortly expire, are being folded into an internally managed U.S. small-cap to midcap index fund.
For international stocks, $35.6 million managed in the SSgA International Alpha Fund will be moved to SSgAs Select Active International Fund. Also, a CalPERS international index fund will be added as an option.
In asset allocation funds, SSgA will continue managing a combined $132 million in three funds.