January 24, 2017
CalPERS is considering adding additional asset classes beyond equities, fixed income, inflation and liquidity. The move, as part of the board’s yearlong review of the pension fund’s $305.5-billion portfolio, is aimed at reducing volatility and delivering more diversification.
A proposed approach is to create two asset classes – market cap-weighted and non-market-cap weighted – from the currently configured equities class. The fixed-income portfolio would be expanded into multiple classes, including U.S. government-related, fixed-income spread products, and high yield.
Proponents say the changes could potentially improve returns and protect CalPERS in the event of a market downturn. A new asset allocation is slated to be voted on by the board in February 2018, and go into effect in July 2018.
For comments, questions or concerns, please contact Dennis Kaiser