calpers

Ted Eliopoulos is named chief investment officer of the California Public Employees’ Retirement System, the nation’s largest public pension fund.

By Marc Lifsher
September 16, 2014

California’s huge pension fund has turned to a trusted insider to take over the daunting job of directing almost $300 billion in investments, crucial to the retirement of more than 1 million current and former state and local government workers.

After a nationwide search, the California Public Employees’ Retirement System said Wednesday that it had picked Ted Eliopoulos, a seven-year investment expert at the fund who has been the interim chief investment officer since February.

Just this week, Eliopoulos, 50, of Sacramento, guided the CalPERS board through its decision to sell $4 billion in complex and costly hedge fund investments over the next year. Many market watchers gave the pension fund high marks for rethinking its investment strategy.

After concern in recent years about CalPERS’ speculative investments and some feeble returns during the recession of 2008-09, Eliopoulos and his late predecessor, Joseph Dear, came up with a new strategy.

“We’re lowering the risk profile,” Eliopoulos told the board in February 2011 in a briefing on changes in real estate holdings. “It’s a gradual transformation of the existing portfolio. We’re building up a base, particularly of quality real estate over a sustained period of time.”

The new caution, a recently strengthening national and global economy and a domestic bull stock market have been good to CalPERS, largely under the investment guidance of Eliopoulos. CalPERS reported an 18.4% return on investment for the most recent fiscal year that ended June 30. It was the fourth year of double-digit returns in the last five years.

By contrast, the fund had lost 23.6% of its value in fiscal 2009.

The new tactics, both in real estate and CalPERS’ decision this week to slowly sell hedge fund investments, is a positive move, said Marcia Fritz, a pension-reform advocate. She is a longtime CalPERS critic and president of the California Foundation for Fiscal Responsibility.

“I think he’s being more prudent. We’ll probably see less volatility in the assets level,” Fritz said, noting that she would like to see the fund display the same kind of prudence on the benefit side of its operations.

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