Calpers considers cutting PE allocation over transparency issues

According to several reports, chief investment officer Ted Eliopoulos told the investment board that negative public scrutiny of the asset class made it increasingly difficult for the organisation to compete successfully in the private equity sphere.

He added that Calpers staff were routinely questioned in investment committee meetings about the fund's decision to invest in private equity vehicles.

In July, Calpers will review its private equity investments in order to find an effective governance system to oversee private equity investing, and Eliopoulos reportedly stated that the board may need to weigh a much reduced allocation to private equity in the future.

Calpers last year reduced its allocation to private equity to 8% from 10%, and currently has $324bn of assets under management.

If confirmed, the decision would contrast with other pension funds that are looking to ramp up their involvement in the asset class.

For instance, the San Diego County Employees Retirement Association (SDCERA) will begin considering private equity co-investments, according to documents published on its website.

The association has an 8% allocation to private equity, which amounts to $715m. It currently has just shy of $11bn in investments.

More LPs are looking at co-investments as a way to boost returns, with competition for assets reducing returns among traditional private equity investments as well as other asset classes. SDCERA's private equity investments have been one of its best performing asset classes over the last five years, with a total return of 12.7%.

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• Topics
• LPs
• CalPERS
• United States