SACRAMENTO, Calif. CalPERS voted Aug. 13 to eliminate its permissible emerging markets list and instead use a principle-based approach that allows emerging markets managers to invest in any country in the FTSE All-Emerging index. Managers will evaluate countries and companies on political stability, transparency of information, labor practices and other factors.
The $242.7 billion California Employees Retirement System, Sacramento, invests $5.8 billion with six emerging markets managers: AllianceBernstein; Batterymarch; Dimensional Fund Advisors; Genesis; Lazard; and Pictet.
General consultant Wilshire Associates also presented a report showing that among companies on CalPERS focus list of firms with poor financial performance and corporate governance, stock prices outperformed their respective benchmarks by an average of 12.2% on a cumulative basis within five years of landing on the list. The firms had underperformed their benchmarks by an average of 86.7% on a cumulative basis in the five years leading up to CalPERS engagement, according to the report. The system has targeted 128 companies in the past 20 years.
Separately, the fund spent $543.4 million in operating costs, or 25.1 basis points, during calendar year 2006, according to a report Cost Effectiveness Measurement presented at the meeting. This was 4.9 basis points less than the median amount spent by other large pension funds, due in part to the funds heavy use of internal management, said the report. CalPERS manages 68% of its portfolio internally vs. 54% for other large pension funds.
Oregon council approves asset allocation changes
TIGARD, Ore. Oregon Investment Council is increasing its real estate allocation to 11% of total assets from 8%; its international equity allocation to 23% from 20%; and its private equity allocation to 16% from 12%. The increases will be funded by reducing U.S. equities 10 percentage points to 23%, said Ley Garnett, spokesman for the council, which manages the $62 billion Oregon Public Employees Retirement Fund, Salem.
The changes follow an asset-liability study.