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Responding to the need for individual savings, the California Public Employees’ Retirement System (CalPERS) approved 19 investment options to be offered to local public agency and school employees beginning November 3, 2008.
The lineup reviewed today by the CalPERS Investment Committee includes 14 new funds, including some that adjust allocations based on the target retirement dates of participants in the 457 Plan, which has almost 27,000 active employees in 660 local agencies and schools. CalPERS investment staff will manage seven funds.
“These funds will help our members diversify their individual supplemental income plans to take advantage of the investment expertise of CalPERS,” said Rob Feckner, CalPERS Board President.
New funds also will allocate assets based on participants’ risk tolerance. Like target retirement date funds, they will be managed by CalPERS or external managers including four new active managers – two with small-mid cap funds, one with international equity, and one offering stable value.
Fees are low, ranging from 0.6 percent to 0.9 percent, with a wide range of asset classes found in few existing asset allocation funds. Asset classes will include equity (public stocks), fixed income (including bonds), stable value, emerging markets, Treasury inflation-protected securities, real estate investment trusts, and commodities.
Beginning March 2, 2009, CalPERS will offer the same fund lineup to State government employees who participate in the pension fund’s Supplemental Contributions Program, an after-tax savings option.
In other action today, the Investment Committee extended 35 one-year contracts for external managers who oversee more than $25 billion in CalPERS assets. Contracts provide for termination by either CalPERS or the manager with 30 days notice.
“We’re extending their contracts because all of these managers give us diverse strategies that we believe will pay off long-term as market conditions change,” said George Diehr, Investment Committee Chair.
Domestic equity managers were AllianceBernstein L.P., The Boston Company, Marvin & Palmer, Pzena Investment Management, Turner Investment Partners, Golden Capital Management, INTECH, T. Rowe Price, Analytic Investors, First Quadrant, JP Morgan, and Quantitative Management Associates.
International equity contracts were extended for Acadian Asset Management; Baillie Gifford Investment Management; AllianceBernstein (Growth); Fidelity (Pyramis Global Advisors); AllianceBernstein (Value); Grantham, Mayo,Van Otterloo; Arrowstreet Capital; New Star Institutional Managers, AXA Rosenberg, Nomura Asset Management; AQR Capital Management; Quantitative Management Associates; AllianceBernstein (emerging markets); Genesis Investment Management; Batterymarch Financial Management; Lazard Asset Management; Dimensional Fund Advisors; and Pictet Asset Management.
International fixed income contracts were for Alliance Bernstein L.P., Baring Asset Management, Mondrian Investment Partners, PIMCO, and Rogge Global Partners.
And the pension fund approved plans to bid for its General Pension Consultant Pool, which offers a broad range of services, and for a separate contract for a private equity consultant.
The Investment Committee also received a report by Cost Effectiveness Measurement, Inc. that found CalPERS added more value at less cost than other large pension funds for the five-year period that ended December 31, 2007.
It said CalPERS staff actively took advantage of market opportunities to earn $2.3 billion more per year over the five-year period than the pension fund would have achieved by passively following its asset allocation policy.
CalPERS is the nation’s largest public pension fund with more than $225 billion in market assets. The System provides retirement and health benefits to 1.5 million public employees, retirees and family members. For more on CalPERS, visit www.calpers.ca.gov.
