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CalPERS To Review Active Management Strategy

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CalPERS’s investment committee is set to review its investment beliefs, including active equity management strategy.

CalPERS To Review Active Management Strategy

California Public Employees’ Retirement System’s investment committee members will try achieving a consensus on whether active equity management offers better returns as opposed to passive index strategies, after taking into account the fees.

Over 50 percent deployed in passive strategies

The largest pension fund in the U.S, CalPERS, has deployed over half of its $259.8 billion assets in passive management strategies.

The pension fund’s committee is scheduled to meet Monday to validate its investment beliefs, besides taking a view on active management strategies’ superiority over passive strategies, in terms of returns. However, no formal vote on the matter is scheduled at the off-site meeting in Petaluma, Calif.

The investment committee is set to take public comment on any potential consensus arrived by the committee at its August 19 meeting. The investment committee’s beliefs would be put to formal vote on September 16.

Once in three years meeting

The largest pension fund’s investment committee would also discuss at Monday’s meeting its asset allocation formula for the second half of 2014 and 2017 besides for the whole of 2015 and 2016.

The investment committee’s beliefs would ultimately provide pointers to the pension fund’s asset allocation. The pension fund’s asset allocation strategies are reviewed once in three years.

The investment committee is set to approve the pension fund’s asset allocation formula at its December 16 meeting.

CalPERS to tackle bankruptcy filings

Recently, Canylon Lake in California has served notice to CalPERS expressing its intention to quit the fund, citing bankruptcy filings of two major California cities.

CalPERS is battling with bond holders on Wall Street in connection with bankruptcy filings of two California cities: Stockton and San Bernardino. CalPERS is fraught with the uncertainty as the largest pension fund faces the uncertainty while dealing with the bankruptcy filings. Some believe the cities filing bankruptcy are doing so because they’re trying to reduce debt payments while also avoiding its payments to CalPERS.

Despite its heavily tilted passive strategies, the pension fund is also taking active part in the recent corporate proposals. For instance, recently CalPERS announced its decision to vote in favor of a non-binding proposal separating the chief executive and chairman roles at JPMorgan Chase & Co. (NYSE:JPM).

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