A CalPERS-commissioned study from CEM Benchmarking shows the $293.6 billion pension fund paid $1.18 billion in fees or 41.1 basis points in calendar year 2014, slightly below its peer group median of 43.2 basis points.
However, the study does not include performance fees for private equity, real estate, infrastructure and natural resource investments. An executive summary of the study was included in the agenda materials for the retirement system's investment committee meeting scheduled for May 16.
CalPERS' lack of data on private equity performance fees became a major controversy last year. In June 2015, pension fund officials disclosed it could not account for how much it paid in performance fees for the asset class even though it was CalPERS' largest external management cost.
In late November, after implementing a new reporting system, the California Public Employees' Retirement System, Sacramento, reported it paid $700 million in performance fees or carried interest to private equity firms in the 12-month fiscal year ended June 30, 2015.
CEM said in the study that CalPERS was able to achieve overall a slightly lower cost than its peers in 2014 from its equity, fixed income and now-eliminated hedge fund portfolio because of less use of funds of funds and external active management and fewer portfolio overlays. CEM said CalPERS also paid less than its peers in terms of external management and custody fees, and internal management costs. The study did take into account base fees for alternative investments.
CEM says it compared CalPERS to a peer group of 14 global asset owners with assets ranging from $117 billion to $844 billion. The median size of the plans in the peer group was $184 billion.
In a related matter, Mary Anne Ashley, chief of CalPERS' legislative affairs division, and Wylie A. Tollette, chief operating investment officer, said in the agenda materials that CalPERS wants amendments to a California Assembly bill being pushed by state Treasurer John Chiang that would require CalPERS and most other California pension funds to disclose annually all fees charged by alternative investment managers. Ms. Ashley and Mr. Tollette said they support the bill generally, but they want the bill's provisions to apply to new alternative investment contracts only — those signed on or after Jan. 1, 2017. Mr. Chiang also sits on the CalPERS board.
CalPERS officials said general partners might not be willing to renegotiate the reporting requirements contained in prior agreements, some of which are 10 years old.
