CalPERS hired Standard Life Investments to manage $500 million within the $254.9 billion pension fund's strategic partnership program.
The announcement Friday comes after eight months of negotiation with the Edinburgh-based manager and is the first of four firms that officials from the California Public Employees' Retirement System, Sacramento, said in October they intend to hire for the pension fund's new Multi-Asset Class Partners Program pending successful negotiations.
The other firms are AQR Capital Management, Pacific Investment Management Co. and AlphaSimplex Group, confirmed Joe DeAnda, a CalPERS spokesman, in an interview.
CalPERS will ultimately invest a total of $8 billion with the four managers, with funding coming from rebalancing all asset classes on a pro-rata basis.
The MAC program is intended to outperform the total defined benefit portfolio over a market cycle with a minimum combined annualized return target of 7.5% and with maximum annualized volatility of 12 percentage points. CalPERS has an assumed annual rate of return of 7.5%.
Additionally, the strategic partnership program has an explicit goal of knowledge transfer between the MAC managers and CalPERS investment staff.
“Standard Life's approach presents us with an excellent opportunity to add value to our portfolio and to our investment operations by bringing in an outside perspective as we work toward our long-term investment goals,” said Joseph Dear, the pension fund's chief investment officer, in a news release.
