CalPERS Lowers Risk in Bond Portfolio; Revises Placement Agent Disclosure

(September 8, 2010) — The California Public Employees’ Retirement System (CalPERS) is working on lowering its targeted alpha and risk in its $46.6 billion fixed-income portfolio by 50%.

At its September 13 meeting, changes to the scheme’s domestic investment range, including US Treasury and government-sponsored securities, consist of changing the range of the domestic fixed-income portfolio to 10- 80% from zero to 80%, mortgages to 15-45% from 10-60%, corporate bonds to 10-40% from 10-50%, opportunistic to zero to 12% from zero to 20% and sovereign debt to zero to 10% from zero to 15%.

In addition, the committee will consider revising the $206.7 billion portfolio’s placement agent disclosure policy to conform to a state bill being weighed in the Legislature. The bill would require certain placement agents register as lobbyists.

“The bill is consistent with efforts by the CalPERS board to be in synch with the filing of campaign reports as required for candidates of other state offices,” the fund’s information officer Clark McKinley told ai5000 last month. “We believe it’s appropriate under our own good governance and transparency guidelines that existing campaign contribution limits be extended to board members as well.”

The move by California lawmakers comes as pension officials across the country have been under intense scrutiny for their use of so-called placement agents, who offer access to pension officials in return for monetary gain. In May of last year, CalPERS revealed that a former board member, Alfred Villalobos, had allegedly used his access to the pension giant to make more than $60 million by helping money managers get CalPERS’ business. The fund, whose total fund performance was -4.6% for the quarter ended June 30, subsequently launched an investigation into the placement agent issue, which is still ongoing.