US- CalPERS is set to boost the amount of active internally managed funds if a request to make two test portfolios permanent and increase the allocation to a fundamental portfolio is approved by the investment committee at a meeting tomorrow (February 17).
Both portfolios were funded in 2007 with $100m each. One is an emerging markets version of a fundamental portfolio, which calculates securities weights based on factors like a firm's sales, book value, cash flow and dividend payouts. The other uses a country-tiered method where countries are weighted using multiple factors in addition to cap-weights.
Staff at the $174.2bn California Public Employees' Retirement System is also asking the committee to increase the cap for a fundamental developed markets international portfolio to 10% of global equity, or about $7bn, from a cap of $1bn now. The change will put the allocation target in line with the system's domestic fundamental portfolio, which is also capped at 10% of global equity.
Separately, if approved at the meeting, the committee will hire six international developed and emerging markets managers to be included in a list of pre-approved managers available for staff to tap into.
The three developed managers are: Martin Currie, OFI Institutional Asset Management and Principal Global Investors.
The three emerging markets managers are: Aberdeen Fund Management, Pyramis Global Advisors and Wellington Management. The firms responded to a request for proposals issued in July.
Also, CalPERS' credit enhancement program generated net earnings of $3.9m in 2008, a 95% increase from the previous year. The program cuts the cost of debt for borrowers, like municipalities, with low bond ratings by backing them with letters of credit issued by CalPERS.
Michael Schlachter, managing director at consulting firm Wilshire Associates said in a letter to staff that the exit of other participants from the CEP market, combined with an increased need for public entities to raise debt and reduce costs has created an increased demand for CalPERS' program.
The Pensions and Lifetime Savings Association (PLSA) is in the process of convening an industry-wide group to take forward the work of the Institutional Disclosure Working Group (IDWG).
The Transfers and Re-registration Industry Group (TRIG) has given its support to an initiative which aims to complete occupational pension transfers within three weeks.
Scottish Widows has completed a bulk annuity deal for the Hitachi UK Limited Pension Scheme.