CalPERS to Cut Outside Managers by 50%

As part of an ongoing strategy to cut investment-related expenses, CalPERS will be cutting the number of external investment managers it works with by 50 percent over the next five years, according to a Wall Street Journal report.

CalPERS announced last year that it would look into cutting two-thirds of its private equity managers. But this new development will see the pension fund cutting managers in other parts of its portfolio.

From the Wall Street Journal:

The California Public Employees’ Retirement System, or Calpers, will tell its investment board on June 15 of its plans to reduce the number of direct relationships it has with private-equity, real-estate and other external funds to about 100 from 212, said Chief Investment Officer Ted Eliopoulos. The action will be made public on Monday.

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The pullback would take place over the next five years and is expected to save Calpers hundreds of millions of dollars in management fees. It paid $1.6 billion to external managers last year.

The reduction in outside managers won’t fundamentally change Calpers’s investment strategy, or the percentage of assets managed in-house versus externally. The remaining 100 or so outside managers will simply get a bigger pool of funds varying from $350 million to more than $1 billion, Mr. Eliopoulos added.

The goal, Mr. Eliopoulos said, is “to gain the best deal on costs and fees that we can.”

CalPERS is the largest pension fund in the United States, and manages over $300 billion in assets.

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