"As you know, under the leadership of (CalPERS CEO) Marcie Frost we have focused on diversifying the portfolio in several respects, including strategy and structure," Orlich said.
The $483.3 billion California Public Employees' Retirement System, Sacramento, has $63.5 billion in private equity.
This is part of CalPERS' goal since 2022 to diversify its private equity portfolio, which had been dominated by large private equity managers, to invest more with smaller managers, he said.
As part of that diversification, private equity staff "has been working to increase the racial, ethnic, gender composition and other characteristics of the asset managers within the private portfolio focused on achieving if not exceeding those performance objectives." Orlich told the board.
Diversity leads to new ideas and better investment results, he said.
In June, then-CalPERS CIO Nicole Musicco said staff was "right-sizing" the pension fund's portfolio between large buyout, which at the time represented 73% of its private equity portfolio, and middle-market and sector-focused buyout investments.
At the same educational meeting, the board heard from Mindy Lubber, CEO and president of sustainability nonprofit organization Ceres, said the money management industry needs to reframe ESG.
"We don't need cuter words," Lubber said after being asked about the environmental, social and governance backlash by Frank Ruffino, who is California Treasurer Fiona Ma's designee on the CalPERS board. Pointing to the roughly 30 bills in state legislatures and 10 bills in Congress, she said the so-called campaign against woke capitalism is having a chilling effect on companies that are moving on ESG, diversity, equity and inclusion.
"They don't want to talk about it anymore," she said.
Climate risk ought not be in a special bucket, Lubber said. Climate risk is as much of a risk to businesses and investment portfolios as inflation or currency risk, she said.
"If it's a risk, it's a risk," she said.
It is a board member's fiduciary responsibility, which is a core responsibility, to consider all material risks, Lubber said.
Separately, for periods ended Dec. 31, CalPERS earned a preliminary return of 10.3% for one year, 3.5% for three years, 7.9% for five years, 6.5% for 10 years and 6.7% for 20 years, Frost told the board. Multiyear returns are annualized.
"These are preliminary numbers" as staff is still going through the verification process, Frost said.
In other action, the board re-elected Theresa Taylor as board president and David Miller as vice president.