By Chris H. Sieroty
LOS ANGELES – The board of the California Public Employees’ Retirement System, the nation’s largest public pension fund, voted on Monday to let its investment staff increase the fund’s asset allocation for private equity and venture capital investments and to reduce stock holdings.
The board of Calpers voted to raise the fund’s Alternative Investment target allocation for private equity and venture capital by 4 percent to 14 percent of its recommended portfolio allocation.
“This is not intended to be a long-range strategy but reflects our preference for higher liquidity and moderate risk, as well as the flexibility to respond to challenges and opportunities in the markets,” said George Diehr, chair of the CalPERS Investment Committee. “Our investment officers will follow these guidelines as we position ourselves for short-term investment opportunities over the next year or so.”
Calpers’ board reduced the fund’s Global Equity target allocation to 49 percent from 56 percent of its portfolio allocation. The target allocation for the fund’s cash was increased to 2 percent from zero and the target allocation for its fixed- income investments was raised to 20 percent from 19 percent.
The fund’s real estate allocation was held steady at 10 percent and its allocation for inflation-linked assets was left unchanged at 5 percent.
“All investors in every sector have experienced unprecedented devaluations as a result of systemic threats to financial institutions and major companies,” said Priya Mathur, vice chair of the CalPERS Investment Committee. “We reassessed our strategic investment approach, incorporating current assumptions about the market that we didn’t have 18 months ago.”
As of June 12, Calpers was valued at $183 billion.