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Money Management

Former CalPERS CIO Eliopoulos headed to Morgan Stanley

CalPERS; photographed on Sept. 26, 2014 by David Toerge

Theodore "Ted" Eliopoulos will be joining Morgan Stanley (MS) Investment Management in January in the new position of vice chairman of investment management and head of strategic partnerships, based in New York, Mr. Eliopoulos said in an interview.

Mr. Eliopoulos resigned effective Nov. 16 as chief investment officer of the $344.4 billion California Public Employees Retirement System, Sacramento.

"The position was created for me to help build and maintain strategic partnerships with asset owner clients of MSIM," Mr. Eliopoulos said.

In this position, Mr. Eliopoulos will work with the senior investment teams across MSIM's six business segments to expand the firm's multiasset class strategic partnerships with asset owners, among other things. He will report to Daniel Simkowitz, who is the head of Morgan Stanley Investment Management.

"Ted's unique perspective leading a world-class asset owner, as well as his deep expertise in alternatives, ESG and portfolio construction, afford him a unique perspective that will help MSIM deliver differentiated value to our clients," Mr. Simkowitz said in an internal memo obtained by Pensions & Investments.

Mr. Eliopoulos is acquainted with Morgan Stanley because CalPERS hired Morgan Stanley Investment Banking to help restructure the pension fund's troubled housing portfolio. The market value of CalPERS' housing portfolio dropped 35% to $6.1 billion in fiscal year 2008 from its $9.3 billion book value. As of June 30, 2018, some 3% of CalPERS $31.8 billion real estate portfolio was in housing.

"It was a very trying time ... They helped us restructure that portfolio at a time of great crisis," said Mr. Eliopoulos, who at the time was head of real estate. He took on the role of CalPERS CIO in September 2014. He was replaced by Paul Mouchakkaa, who was a managing director in Morgan Stanley's real estate division.

CalPERS has also invested with Morgan Stanley, including a $300 million commitment to Morgan Stanley Infrastructure – North Haven Infrastructure Partners II.

CalPERS' pre-financial crisis investments with Morgan Stanley in residential mortgage-backed securities are part of a 2016 lawsuit brought by then-California Attorney General Kamala D. Harris against Morgan Stanley in San Francisco Superior Court for allegedly making misrepresentations that caused CalPERS as well as the now $219.2 billion California State Teachers' Retirement System, West Sacramento, to invest in the securities. The lawsuit is ongoing.

Once Mr. Eliopoulos joins Morgan Stanley, he is barred from approaching CalPERS by state rules and regulations.

He left CalPERS before the pension plan's new CIO arrived. Incoming CIO Yu Ben Meng is not scheduled to join CalPERS until sometime in January. Mr. Meng had worked at CalPERS for seven years, starting in 2008.

"Once a new CIO was selected, who had a long history with CalPERS, I consulted with our CEO (Marcie Frost) and together we determined that given the fund was in good hands and I desired to take time off over the holidays, that it made sense," he said, explaining the timing of his departure.