CalPERS ups investment manager discretion in real assets

Key members of staff can now make larger infrastructure investments without committee approval.

The California Public Employees' Retirement System has doubled the threshold for its managing investment director and chief investment officer to invest in infrastructure without committee approval to $1 billion and $2 billion respectively.

Similar changes have been made across other real assets, including in real estate and forestry.

Under the updated guidelines, the limits on discretionary commitments by senior investment officers will more than double across CalPERS’ $32.38 billion real assets portfolio.

In real estate, the limit on commitments by the managing investment director and CIO has been doubled to $3 billion and $6 billion. For forestry, the limits were increased from $0.25 billion to $1 billion and $0.5 billion to $2 billion, respectively.

Differences in limits on new versus existing commitments and debt investments have been eliminated.

The moves are described in the fund documents as part of a broader effort to reduce complexity and improve transparency in the pension’s investment strategy.

Managers are still required to mitigate risk by maintaining “an appropriate level of diversification”, and the fund has outlined geographical limits for each sector.

A CalPERS information officer told sister publication Agri Investor that the changes would not affect the fund’s total real assets allocation.

“It’s important to note that allocations for Real Asset programmes have not been changed,” the spokesperson wrote in an email. “Investing by staff still follows existing strategy and the allocation policy targets set out by the Board.”

Some public pensions are seeking ways to lower hurdles that can hamper deal execution, particularly in areas like co-investments.

New Mexico Education Retirement Board senior portfolio manager of real assets, Mark Canavan, recently told Agri Investor that the capacity to make discretionary deals is important for improving dealflow.

CalPERS has $307.01 billion of assets under management, according to Infrastructure Investor Research & Analytics.