US - The largest public pension fund in the United States, California Public Employees' Retirement System (CalPERS), is set to change the way in which it hires, monitors and fires stock and bond external asset managers.
The US$163bn (e133bn) fund says the new practices, voted on by its board of administration, aim to streamline the external manager hiring process and improve performance.
“The way in which we have administered our external management program has not changed in 25 years,” said CalPERS board president Sean Harrigan (pictured).
“These changes bring us up to date with industry standards and I’m confident that will translate to improved performance, more efficient administration and enhanced perception of CalPERS as an attractive and valuable client by money managers.”
The new business practices will include: establishing a spring-fed pool of qualified US and international equity and fixed income managers to manage assets, streamlining the hiring process, internal approval and contract processes so the fund can react quickly to changing market conditions, eliminating the CalPERS public watch list process and replacing it with a quarterly performance report and delegating termination of managers to CalPERS staff, with notification to the board.
The changes were modelled on the findings of a survey of nine public and corporate pension funds conducted by CalPERS earlier this year, which found all the funds had migrated to a model of external manager capital allocation similar to the one recently approved by CalPERS.
CalPERS, which provides retirement and health benefits to more than 1.4m state and local public employees and their families, has 60 accounts with external money managers who invest more than US$47bn in US and international equity and fixed income.
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