CalPERS has reduced the number of its external money managers to 159 from 212 in a nine-month period, said Wylie Tollette, the pension fund's chief operating investment officer.
Mr. Tollette told the CalPERS investment committee Monday that the reductions occurred between June 2015 and April 2016. The reductions are part of a plan for CalPERS to reduce the number of external managers to 100 by 2020. CalPERS officials could not provide by press time detailed information, including the names of terminated managers and whether a particular asset class predominated.
However, at least one CalPERS investment committee member is concerned. Board member J.J. Jelincic said in an interview that despite the reductions, the $290.4 billion California Public Employees' Retirement System, Sacramento, is paying too much in external management fees compared to its peers. He cited as an example a CEM Benchmarking study that showed that CalPERS paid a median 63 basis points in 2015 for its $24.4 billion externally managed equity portfolio compared to its peer pension funds, which paid a median 46.9 basis points. Mr. Jelincic said CalPERS can't just reduce its number of managers; it has to reduce the fees it pays.
In other action, the investment committee is speeding up the time frame on the delivery of a staff report as to whether the retirement system should reinvest in tobacco stocks. In April, the investment committee approved a 12- to 24-month time frame. On Monday, it reduced the span to six to nine months. CalPERS decided to divest from tobacco stocks in October 2000.