CalPERS will standardise the process by which it selects investment partners as part of the investment office’s roadmap for 2011-2012 which includes six strategic priorities including the new categories of talent management and investment performance.
As part of the investment performance priority, the processes for external manager and investment partner selection, negotiation and monitoring will be standardised, according to a presentation given by chief investment officer, Joe Dear, to the investment committee.
In addition more attention will be paid to enhancing investment performance attribution and reporting, with the overall aim of outperforming the fund’s relevant peers on a return per unit of cost.
There are also priorities within each asset class. The affiliated programs, global equity and inflation-linked assets will all see organisational structure changes, while within the fixe- income asset class, the priority is to insource short-duration fund and review currency overlay strategy.
The global-equity asset class will prioritise the implementation of the capital allocation model and finalise the ESG strategy; while the AIM will continue to streamline and optimise the portfolio and implement the dedicated co-investment strategy.
Real estate and infrastructure will implement phase one of their 2011 strategic plan, as reported last week (click here).
Overall the strategic priorities for 2011-2012 are:
- achieve investment performance targets
- establish a new capital allocation framework
- strengthen risk management
- strengthen organisational systems and controls
- improve cost-effectiveness
- enhance talent management
Within risk management the aim is to implement a total fund investment risk management system, fund and asset class risk budgeting and monitoring, and deliver enhanced capabilities for performance and risk attribution. It also outlines a priority to implement operating risk evaluation process for new investment ideas.
CalPERS’ investment team aims to enhance its cost-effectiveness and will continue on its fee-reduction initiatives. It will also evaluate and select a tool for financial reporting to track and manage expenses.
The roadmap was initiated in 2010 and the idea is it lays the foundation for a more thoughtful, longer-term planning effort to clarify the strategic direction and identify the objectives and initiatives for strengthening the investment office capacity and performance.
