CalPERS will increase its private equity and real estate allocations to 10% each of the fund’s assets and add a 5% allocation to an inflation-linked asset class, if a new asset allocation recommended by staff is approved at the board’s Dec. 17 meeting. The $259.5 billion California Public Employees’ Retirement System, Sacramento, currently targets 6% of assets to private equity and 8% to real estate, according to a staff memo to the board. Funding for the changes would come from cutting global equities to 56% of assets from 60% and global fixed income to 19% from 26%.
Under an alternative proposal, private equity and real estate would be increased to 9% each, with global equities being cut to 57% and global fixed income, 20%. The inflation-linked asset class would remain at 5%.
The suggestions are a result of a November asset/liability management workshop.
Staff also recommends issuing an RFP for non-investment-grade bond and leveraged loan managers to be pre-approved for potential investments. In June, trustees increased the target for these assets to 15% from 10% of the $59 billion internally managed domestic fixed-income portfolio, said Clark McKinley, spokesman at CalPERS.
In addition, staff will search for firms for a pre-approved list of general pension consultants for the fund’s supplemental income plans, which have a combined $1.1 billion in assets, said Mr. McKinley. One of the consultants will help CalPERS develop its own target-date funds, according to a memo to the board.
Staff also recommends hiring Evergreen Investments, Putnam Investments and Boston Co. for a pre-approved list of active smidcap growth equity managers for the supplemental income plans, and Systematic Financial Management and Boston Co. for a pre-approved list of active smidcap value equity managers. CalPERS issued an RFP on June 7.
