calpers

The nation’s largest pension fund is planning to slash the number of Wall Street firms its uses to manage its investments.

By Dean Starkman
June 8, 2015

The California Public Employees’ Retirement System plans to cut in half the number of Wall Street firms it pays to manage its $303 billion fund, an effort to cut down on high fees that drag down returns.

The plan, outlined by internal staff in a presentation to CalPERS’ investment committee, would reduce the number of external managers and outside consultants from 212 now to 100 over the next five years.

The plan is the second major effort by CalPERS’ chief investment officer, Ted Eliopoulos, to cut investment expenses.

Eliopoulos, who was appointed last September, quickly made waves on Wall Street by ending the fund’s $4-billion program to invest in hedge funds, slashing about $135 million in fees. CalPERS said its hedge fund investments were too small to justify their cost and complexity.

The latest effort is far more ambitious and would include private equity and private real estate, which together make up about 20% of CalPERS’ portfolio but represent the bulk of outside fees.
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