Cost Effectiveness Measurement, Inc. (CEM), which tracks 134 pension plan funds, said CalPERS investment staff took advantage of market opportunities to earn $1.6 billion more than CalPERS would have gained last year by just following its asset allocation policy, and $14 billion over the last ten years.
The pension fund spent $424 million to manage its investment portfolio in 2004, paying less for consulting, custodial and active management services than its peers, whose target standard for such services averaged $134 million more than CalPERS costs.
Compared with its peers, CalPERS spent $10.1 million less for overall oversight, $18.3 million less for administrative costs, $74.5 million less for external management, and $367,000 less for internal management, the CEM report said.
"This report indicates that one of our best investments is the high quality of our in-house professional staff," said Charles P. Valdes, Chair of CalPERS Investment Committee. "They have generated most of these savings by managing much of our portfolio in-house."
CalPERS added value in all major asset classes in 2004 to exceed many of its peers, who used a similar asset allocation policy, the report said. CalPERS earned a 13.5 percent return for the one-year period that ended December 31, 2004.
In another announcement, Plexus Group, a division of JPMorgan Chase Bank N.A., recently announced that CalPERS placed in the top performance quartile of the Plexus Plan Sponsor Universe of more than 50 funds that oversee more than 600 equity asset managers. CalPERS received the Plexus Group Gold Iceberg Award for the achievement.
"This award recognizes our best practices in getting the most from our asset managers while minimizing costs to our employers, members, and taxpayers," said Mark Anson, CalPERS Chief Investment Officer.
CEM's report can be found on CalPERS On-Line at www.calpers.ca.gov.
CalPERS is the nation's largest public pension fund with assets of more than $190 billion. The System provides retirement and health benefits to more than 1.4 million State and local public employees and their families.
