Home > News > Corporate Moves > Simiso Nzima Named Head of CalPERS’ $250 Billion Global Equity Portfolio

Corporate MovesOctober 19, 2021

Simiso Nzima Named Head of CalPERS’ $250 Billion Global Equity Portfolio

The pension giant’s global equity program accounts for more than half of its entire asset value.

Simiso Nzima

The $487 billion California Public Employees’ Retirement System (CalPERS) has promoted Simiso Nzima to managing investment director of global equity to oversee the $250 billion asset class’ investment strategies, programs, and policies.

Nzima, who has been a member of CalPERS’ investment team for more than 16 years, was most recently investment director and head of corporate governance, overseeing the entire corporate governance program, including proxy voting, shareowner campaigns, and corporate engagements.

“Simiso has a deep understanding of our portfolio and the global equity asset class,” Dan Bienvenue, CalPERS interim CIO, said in a statement. “He is a thoughtful leader and a strategic investor with extensive experience in the financial industry. He will do an exceptional job in his new role.”

Prior to joining CalPERS, Nzima was a fund manager at First Mutual Life in Harare, Zimbabwe, according to his LinkedIn profile. He was also a senior equity research analyst at Sagit Stockbrokers and an equity research analyst at Alliance-MBCA Capital Management, both of which were also in Harare.

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The Chartered Financial Analyst (CFA) charterholder earned a bachelor of commerce honors degree in finance from the National University of Science and Technology in Zimbabwe and a Master of Business Administration from the University of California Berkeley’s Haas School of Business.

CalPERS’ global equity program, which accounts for more than half of the pension giant’s asset value, is responsible for the fund’s global public equity investments, including direct in-house implementation of domestic, international, and emerging market indexes and alternative-beta portfolios, as well as externally managed active strategies. The global equity program is also responsible for CalPERS’ corporate governance activities, including proxy voting and corporate engagement. Assets in the portfolio include US and international public equities, foreign currencies, and derivative exposure.

“I am honored to have the opportunity to lead a talented group of professionals in global equity,” Nzima said in a statement. “Our team is committed to generating the investment returns needed to fulfill CalPERS’ mission to deliver retirement security to our members and their beneficiaries.”

Why 3Q Earnings May Undershoot Estimates

That has happened just once since 2009, but CFRA’s Stovall expects a re-run.

By Larry Light

The third-quarter earnings season is underway, and it looks as if the results will be good. But maybe not quite as good as analysts predict. Equities guru Sam Stovall warns that the September-ending quarter could end up disappointing.

In fact, the recent three-month period “could become only the second quarter out of the past 49 to see actual results undershoot end-of-quarter estimates,” CFRA’s chief investment strategist writes in a research note. Still, the expected earnings jump is already very high, so a small decline would hardly be a disaster. But, some argue, it could be a harbinger of reduced returns in the future.

Right now, the analysts’ prediction is for a 24.4% year-over-year rise in earnings per share (EPS), per S&P Capital IQ, although Stovall doesn’t put a number on what he thinks the actual outcome will be. At this juncture, the only S&P 500 sectors with anticipated EPS declines are consumer discretionary and utilities.

The reasons for the third-quarter undershoot are the bearish litany we’ve all heard lately: supply chain snarls, wage hikes, and commodity price increases, Stovall reasons. Plus, he points to weakening gross domestic product (GDP) growth estimates and a much softer-than-projected rise in September non-farm payrolls.

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Since the bull market kicked off in early 2009, the benchmark index has logged quarterly EPS growth that exceeded analysts’ expectations in 47 of 48 quarters, missing only in 2020’s pandemic-stricken second period, the CFRA report says. “Will Q3 of 2021 be #48?” Stovall wonders.

Meanwhile, current estimates for next year are more modest than for 2021. The S&P 500 EPS increase is expected to rise just 8.8%, compared with 40.3% for all of calendar 2021, Stovall points out.

Of course, earnings are traditionally the major driver of stock prices. The S&P 500 energy sector has returned the most this year, says Yardeni Research—51.8% as of last Friday. In second place are financials, up 33.9%

“The energy sector is going to experience a windfall in the third quarter” for EPS, CFRA figures. And that, the research note goes on, will be “a welcome change from the small loss in the year-ago quarter.” The propellant: much higher oil prices. Crude finished Monday slightly above $82 per barrel, which is double the level of 12 months ago. Some energy bulls see oil topping $100 in the near future.