CalPERS invests $350m with emerging managers

Date: Thursday, February 7, 2008
Author: Cardiff de Alejo Garcia, Financial News Online

The California State Employees’ Retirement System has expanded its investments in emerging managers by placing $150m (€102m) in a minority-focused hedge fund of funds and an additional $200m in a long-only equity manager, as the pension scheme continues searching for ways to diversify its $245bn portfolio.

The $150m investment into FIS Group, which oversees nine long-only funds, represents CalPERS’ first allocation to an emerging manager fund of funds since it revealed a $1bn program to invest in such managers a year ago.

Russell Read, CalPERS chief investment officer, said in a statement: “FIS will give us access to a larger number of skilled emerging firms to generate solid investment returns and reflect the diversity of the market.” Three of the nine funds in FIS are run by African Americans and another three by women, according to the statement.

CalPERS has also invested $200m into Redwood Investment Management, a long-only equities manager, as part of the pension scheme’s manager development program. The program, which is now in its second phase, places money with emerging managers who manage less than $2bn in assets.

Thus far CalPERS has invested about $2bn in emerging managers as part of the program, including yesterday’s investments. All of the investments are considered part of the fund’s allocation into equities, which account for more than half the total portfolio.

Clark McKinley, a spokesman for CalPERS, added: “Diversification is part of it, and another part of it is the opportunity to find managers on the small end of the market. The demographics [of California] are changing, and you want to find managers who reflect these demographics.”