CalPERS board members and staff got to play around with hundreds of millions of dollars in investments, but only as part of an exercise.
Approximately three dozen officials at the Jan. 20 board meeting of the $207 billion California Public Employees' Retirement System, Sacramento, were divided into three teams, each of which was given a different portfolio to analyze. The outcome? They rejected investing at least $10 million in a private equity fund because they felt the managers were too inexperienced and were collecting too high a fee. But they approved plans to invest $500 million into a large portfolio of neighborhood shopping centers and an unspecified amount into an active, quantitatively driven international equity mandate.
The three investment options were based on real-life CalPERS investment scenarios, said spokesman Clark McKinley and were part of an exercise in investment due diligence. The meeting was held in Napa.
As part of the exercise, CalPERS consultants played money managers, pitching investments to the board members and staff, who had to come up with questions on the spot for the “managers.” The board members then voted whether to invest in the particular strategies.
The private equity deal was rejected unanimously. Most board members and staff favored the international equity mandate, but they were split on the real estate deal.
In actuality, the CalPERS board was more enthusiastic in July when it revealed it had closed on a $463 million real estate transaction for a portfolio of shopping centers. Mr. McKinley confirmed the scenario was based on that deal. — Randy Diamond
