CalPERS unveils plans for new investment model
18 May 2018 Sacramento
Image: Shutterstock
CalPERS is set to launch two new business models for its private equity programme in the H1 2019.
The models, which are part of a larger review of the private equity programme, would create a new and separate entity known as CalPERS Direct to make direct private equity investments.
According to CalPERS, the CalPERS Direct model will continue the fund's efforts to find new approaches to increasing investment returns, while it works to increase the system's funded ratio and help its employer partners manage pension contributions.
It is expected that CalPERS Direct will be governed by a separate, independent board to advise on allocation and longer-term capital market perspectives and consist of two separate funds.
One would focus on late-stage investments in technology, life sciences, and healthcare, and the other on long-term investments in established companies.
The models are expected to operate alongside CalPERS's existing private equity structure that typically invests in co-mingled private equity funds. Plans are subject to a final review and approval by the board.
Ted Eliopoulos, chief investment officer at CalPERS, commented: "We're excited to move forward with this new approach for CalPERS. Our investment team has spent months exploring options in order to design an approach to private equity that takes advantage of our size and brand. We believe it will drive stronger private equity returns and help achieve economies of scale over time."
Marcie Frost, CalPERS CEO, said: "We need to think differently about how we invest so that we can generate the returns that we need. Our members and employers need us to be focused on strong risk-adjusted returns and growing our funded status, and this approach does just that."
Henry Jones, chair of the investment committee at CalPERS, commented: "CalPERS Direct is a long-term investment strategy specifically designed to align with the long-term liabilities we have as a pension system."
He added: "That long horizon also gives the CalPERS board an opportunity to influence the culture of CalPERS Direct to ensure their actions are in sync with our investment beliefs. The board will continue to review each step in the development of CalPERS Direct before we give final approval to launch it."
The models, which are part of a larger review of the private equity programme, would create a new and separate entity known as CalPERS Direct to make direct private equity investments.
According to CalPERS, the CalPERS Direct model will continue the fund's efforts to find new approaches to increasing investment returns, while it works to increase the system's funded ratio and help its employer partners manage pension contributions.
It is expected that CalPERS Direct will be governed by a separate, independent board to advise on allocation and longer-term capital market perspectives and consist of two separate funds.
One would focus on late-stage investments in technology, life sciences, and healthcare, and the other on long-term investments in established companies.
The models are expected to operate alongside CalPERS's existing private equity structure that typically invests in co-mingled private equity funds. Plans are subject to a final review and approval by the board.
Ted Eliopoulos, chief investment officer at CalPERS, commented: "We're excited to move forward with this new approach for CalPERS. Our investment team has spent months exploring options in order to design an approach to private equity that takes advantage of our size and brand. We believe it will drive stronger private equity returns and help achieve economies of scale over time."
Marcie Frost, CalPERS CEO, said: "We need to think differently about how we invest so that we can generate the returns that we need. Our members and employers need us to be focused on strong risk-adjusted returns and growing our funded status, and this approach does just that."
Henry Jones, chair of the investment committee at CalPERS, commented: "CalPERS Direct is a long-term investment strategy specifically designed to align with the long-term liabilities we have as a pension system."
He added: "That long horizon also gives the CalPERS board an opportunity to influence the culture of CalPERS Direct to ensure their actions are in sync with our investment beliefs. The board will continue to review each step in the development of CalPERS Direct before we give final approval to launch it."
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