Wednesday, March 25, 2009

CalPERS Monthly Update


CalPERS total fund size dropped another $3 billion in March to $167 billion. Believe it or not, this 1.7% monthly drop is an improvement, since the fund hit a cycle low of $160 billion on March 11. Given these gyrations in fund size, it's clear CalPERS remains heavily weighted in stocks. The fact that pensions funds would have shown a better return over the last 10 years using a bond strategy has not been lost on some CalPERS peers. Maybe it's time to fire some of these "professional" fund managers, and take a more simple approach?

4 comments :

Anonymous said...

They need to return to the days where they are trusted custodian of retirement funds.. when their CEO rode the bus, ate in the cafeteria and lived simply.

In the mid 90's they became a political organization as well as began venture capital investing, highly leveraged investing, etc.

Sippn

Max said...

Agreed. CalPERS experiment in hedge fundom is an abject failure. All the management needs to go, and they need to reallocate to a stable, transparent investment portfolio with zero leverage.

The temptation to double-down right now has got to be huge. Can they resist?

Rob Dawg said...

Yes, CalPERS needs to return to investing traditions but please no, not bonds right now.

Anonymous said...

Some of the biggest losses came out of the fixed income group. For instance, the Fannie investment which lost $500M in value (completely wiped out) in about 2 weeks time.

Also, I would argue that right now is THE BEST TIME to be invested in stocks and venture capital. Money stuck into VC over the last 3 years will have a poor return but money stuck in now (at a low) will show some of the best returns just like the investments from the 2000/2001 vintage following the tech market collapse.

Lastly, I agree with the management comment. Most of the top managers have minimal education level and have just been at PERs forever. They moved up based on seniority - not performance. I think retirees (as well as taxpayers that will pick up the tab for poor decisions eventually) should be outraged that top management at PERs received bonuses this year despite losing 30% of the portfolios value.