A spokeswoman for the California pension plan said that it is still “early in our process of evaluating these alternative approaches”, and that “CalPERS is committed to continued investment in private equity, including through the traditional commingled fund model.”
CalPERS’ chief investment officer, Ted Eliopoulos, told the pension plan’s board in November that it is mulling taking a more direct approach to its private equity investing.
Last week, Eliopoulos reiterated these plans and told Bloomberg TV in an interview that it could move as much as $30 billion from external to internal managers as it seeks to reduce fees.
CalPERS’ external managers received $539 million in profit sharing and $252.2 million in net management fees during the fiscal year ended 30 June. While bringing investment capacities in house could help reduce such fees and expenses, matching market-rate compensation for private equity talent remains a challenge, Eliopoulos told Bloomberg.
“We’re looking at other ways we could achieve some of those [direct investing] objectives without going to a completely direct model,” he said, noting CalPERS was investigating whether it could invest in a special purpose vehicle to carry out an investment strategy.
CalPERS’ plans remain in the very early stages however, as noted by a CalPERS’ spokeswoman. “We continue to research and evaluate a variety of alternative approaches to investing in private equity,” she said. “As details emerge over the next few years we expect to provide that information to our board and the public.”
The $302 billion US public pension has an 8 percent target allocation to private equity, which currently stands at 8.7 percent.