CHINA - The US$225bn California Public Employees' Retirement System (CalPERS) has opened the door to Chinese public equity investments "on a case by case basis".
The board voted yesterday to allow stock purchases in selected companies and Clark McKinley, information officer, told Global Pensions that while China "failed to make the cut" for public equity as a whole, there might be "some hot China-based companies" that met the fund's permissible country criteria for investment.
"The CalPERS board has been exploring China investments for the past year, including sending a delegation of board and top staff members to China and calling in local specialists in special sessions," said McKinley.
The fund already has private equity and real estate investments in the country, although McKinley stressed they were "taking a measured approach" through partners and funds of funds.
The fund also chose five global equity managers - Analytic Investors, First Quadrant, Goldman Sachs Asset Management, Quantitative Management Associates and State Street Global Advisors - to generate investment returns by relaxing the "long-only" constraint in their portfolios.
The relaxed long-only strategy will allow managers in the new pool to short-sell US market shares accounting for up to 35% of their CalPERS portfolio's total value. They also would take "long" positions in stocks up to 135% of portfolio value.
CalPERS said it would reallocate assets from passively managed index fund accounts to pool managers "as early as the first quarter of 2007".
Allocations and manager recipients are undetermined. CalPERS will review their contracts annually for an undefined duration.
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