US - The new head of the US$132bn global equities portfolio at CalPERS has revealed plans to move to a more top-down approach in the asset allocation process.
"That is not automatically a valid assumption - it may end up that way, but we need to do the analysis both from the bottom up and the top down," he said.
Baggesen, who was appointed to the position of senior investment officer for global equities in May, revealed one of his primary goals was to look at the global equities portfolio in a more holistic fashion.
This would involve deeper analysis of how different pieces of the portfolio fitted together and greater fluidity at the capital allocation stage.
He explained: "In the global equities portfolio we have a segment of money which gets invested internally, another which uses external managers, another which looks at the Manager Development Programme and environmental [investments]. We also have another which does corporate governance, and another which looks at hedge funds.
"When we interact with the CalPERS board, there has tended to be allocations of capital to specific programme areas and [this means] you have a harder time [working out] how each programme area interacts with the entire global equity portfolio.
"For example, if you made an allocation to the hedge fund programme a couple of years ago, do hedge funds offer the opportunity today that you might have in another part of the programme?"
Baggesen said a move to a more holistic approach was even more pertinent in the wake of the credit crunch. He stated: "We need to be more explicit about analysing trade-offs between the different alternatives when we allocate capital in the current market."
Baggesen replaced Christianna Wood who left in February.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers