SACRAMENTO, Calif. CalPERS plans to abandon its home bias in its $150 billion global equity portfolio, resulting in a dramatically larger allocation to international equities and a sharply lower one to U.S. equities, according to proposals expected to come before the $256.5 billion funds investment committee on Dec. 17.
The portfolio now is split 66.7% U.S. and 33.3%, international. Under the proposal, international would account for 56% of the portfolio: 46 percentage points to developed countries and 10 points to emerging markets. The current structure does not accurately reflect the true nature of the investible universe In fact, such a policy weighting has significantly underallocated to international equity markets, according to a staff report.
Other changes expected to be considered: decreasing global fixed income to 22% of assets from 26%; increasing alternatives to 9% from 6%, and real estate to 10% from 8%; and adding a 5% inflation-linked asset class.