BEVERLY HILLS, Calif (Reuters) – CalPERS, the largest U.S. public pension fund, may consider adding a new “opportunistic” investment class to its menu so it can include securities that do not neatly fit into existing categories.
CalPERS, which manages $175 billion to pay retirement benefits to California’s state workers, will explore adding an “opportunistic bucket,” Joseph Dear, the fund’s chief investment officer, said on Tuesday.
“It would give us the capacity to move quickly to take advantage of investment opportunities that do not neatly fit into the existing five asset classes we use,” Dear told Reuters in an interview at the 2009 Milken Institute Global Conference.
Dear said CalPERS, the California Public Employees’ Retirement System, will take an interim step this year as it prepares to formally review where it invests its money next year. The fund reviews its asset allocation every three years.
“It is intended to address whether we should have an allocation to cash, and what the mix in our equity portfolio should be between public and private equity, and potentially the creation of an opportunistic bucket,” Dear said.
The amount of money that could be allocated would be limited, Dear said, adding it would allow investment professionals to snap up investment opportunities that are relatively new.
“Some of the debt plays that are available today look a lot like equity in terms of returns but the security is labeled as fixed income,” Dear said, giving an example of what would fit into the “opportunistic category.”
CalPERS puts 44 percent of its assets into stocks, but it is well-known for having blazed a trail into alternative assets like hedge funds, private equity funds and real estate. (Reporting by Svea Herbst-Bayliss and Jim Christie; editing by Carol Bishopric)