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CalPERS staff say active public‑equity program has added value; trustees pressed on stewardship and fees
Summary
CalPERS staff presented data showing active public‑equity allocations delivered sizable excess returns over recent years, outlined governance and fee structures, and told trustees the fund is scaling active positions with careful manager selection and risk controls.
CalPERS investment staff told the board they have been rebuilding an active public‑equity program and that the effort has materially contributed to recent returns.
Simeon Zima, speaking for the global public equity team, said CalPERS reintroduced active allocations about three years ago and that the active book has produced an average excess return of about 140 basis points over five years (roughly 1.4%), which staff estimate represents more than $2 billion in value added. Samiso/Simeon also said that adding active allocations since late 2022 has contributed roughly $65 billion to the total fund over the last three years.
Steve Carden, head of active public equities, explained differences between index and active strategies, the governance around manager selection and the move toward performance‑sensitive fee structures. He said index funds remain the default for broad exposure because of low cost and breadth, but active allocations are pursued where staff believe they can generate persistent excess return; internal costs were reported as roughly 34 basis points overall for the active book versus typical off‑the‑shelf fees above 60 basis points.
"Our internal processes, manager selection and governance have enabled us to add money to active without diluting performance," Carden said. He described three core strategy buckets (enhanced index, multifactor, traditional active) and emphasized top‑down coordination with the total‑fund team.
Trustees asked how stewardship is applied across active and passive holdings. Zima said CalPERS applies a universal stewardship standard and that proxy‑voting and engagement are exercised across all holdings. Trustees also pressed on fee structure, risk controls and the staff’s criteria for adding active mandates.
The presentation came amid public comments raising concerns about individual holdings, including calls for Tesla divestment and questions about private‑equity reporting methodology. Staff noted that governance and due diligence remain central to implementation as the active allocation increases.
