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CalPERS pumps cash into fund-of-funds

Date: Monday, March 10, 2008
Author: Ruth Liew, Financial Standard

US pension giant California Public Employees’ Retirement System (CalPERS) has invested an extra $323.1 million last week for emerging managers.

CalPERS has awarded $161.5 million each to emerging manager fund-of-funds manager Leading Edge Investment Advisors LLC and Quotient Investors, a manager in CalPERS’ Management Development Program (MDP).

California’s largest pension fund had previously invested $161.5 million in another emerging manager fund-of-funds, FIS Group, and $215.3 million with Redwood Investment Management in CalPERS MDP.

“These recent public equity investments represent a US$650 million ($699.8 million) commitment to emerging managers,” said Russell Read, CalPERS chief investment officer. “These firms give us access to a larger number of managers to generate positive, long-term investment returns and reflect the diversity of the market.”

Leading Edge is a minority-owned emerging fund-of-funds manager who will allocate CalPERS’ initial $161.3 million investment among seven emerging managers.

New York-based Quotient Investors is a new quantitative equity management firm specialising in industry-specific alpha modeling. The firm will run two portfolios: $107.6 million in a large cap core product and $53.8 million in a small cap core product. Quotient Investors was funded within the MDP through a partnership with Strategic Investment Group.

As of February 29, 2008, CalPERS had $1.9 billion invested in its Manager Development Program and $382.7 million invested in its emerging manager fund-of-funds program.

CalPERS is the nation’s largest public pension fund with assets totaling approximately $258 billion. The System provides retirement and health benefits to 1.5 million State and local public employees and their families.