CalPERS’ board on Feb. 19 will hear a staff recommendation that would create internally managed passive international equity portfolios for small caps/microcaps and developed markets. Staff members at the $244.8 billion California Public Employees’ Retirement System, Sacramento, already manage a total of $83 billion in eight domestic equity portfolios and five international equity portfolios, according to the CalPERS website. Funding amounts and sources have not been discussed, and the board will not vote on the proposal at the meeting.
Staff is also considering making permanent two “developmental” portfolios in structured and fundamental emerging markets equities. The portfolios have been in the “test run” phase since June 1. The fundamental portfolio returned 19.42% and the structured portfolio returned 18.5% since inception. By managing these in-house, CalPERS saves $2.5 million to $4 million typically paid in fees for every $1 billion invested, according to the website. If the strong performance continues, staff will suggest making them permanent in June. Board members will hear about the proposal but will not vote on it.
Separately, Callan Associates and Mercer are expected to be included in a preapproved list of consultants for CalPERS’ supplemental income plans, which have about $1.1 billion in assets. The selections are a result of an RFP issued Dec. 20. Staff plans to use one of the consultants on the list to help develop target-date and risk-based funds that CalPERS plans to offer in the fall, according to the website. Other consultants already on the list for the SIP are Pension Consulting Alliance, R.V. Kuhns and Strategic Investment Solutions.
