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CalPERS reviews four‑year investment plan, weighing total‑portfolio approach
Summary
At a June CalPERS stakeholder webinar, board member Yvonne Walker said the pension fund is conducting its once‑every‑four‑years asset‑liability management review and is considering a total‑portfolio approach proposed by Chief Investment Officer Stephen Gilmore, with final decisions expected in November.
Yvonne Walker, a member of the California Public Employees Retirement System board, said during a June stakeholder webinar that CalPERS is conducting its quadrennial asset‑liability management review and will decide on a new portfolio approach in November.
The review, Walker said, includes an examination of asset‑class performance, updated liability projections and a proposed “total portfolio” approach from CalPERS’ Chief Investment Officer, Stephen Gilmore. “This year is an especially important year for our asset liability management process. We do it once every 4 years, and it's similar to balancing out your bank accounts,” Walker said.
The nut of the discussion is whether to shift from fixed targets for individual asset classes toward a total‑portfolio framework that treats the fund’s investments holistically. Walker said the approach, which her office described as giving the board “a lot more flexibility,” has worked well at other large public funds, including the institution where Gilmore previously served in New Zealand. CalPERS staff, outside experts and the board’s investment consultants are providing analysis and guidance on acceptable levels of investment risk and a reference portfolio against which performance will be measured.
CalPERS staff reviewed a reference portfolio comprised of stocks and bonds this month as part of the process. Walker said the board will continue receiving data and expects to make final decisions about the next four‑year portfolio approach in November. She said the fund is focused on “ways to improve long term outcomes” and on clarifying how much risk the board considers acceptable.
No formal board votes on the portfolio framework were taken at the webinar; Walker said the board will finalize decisions after additional work and deliberation at upcoming meetings. The review is part of CalPERS’ scheduled governance process: the asset‑liability management exercise occurs every four years and is intended to align investment strategy with long‑term pension liabilities.
Background details Walker provided: the board recently reviewed broad asset‑class performance and the investment team’s updated long‑term cost projections. The chief investment officer’s proposal would replace some fixed, class‑level targets with portfolio‑level decisioning to allow more responsive allocation shifts. Officials said they expect additional analysis and public materials to appear on CalPERS’ website as deliberations proceed.
