The California Public Employees’ Retirement System (CalPERS) reported that annual ongoing costs for its investment operations have declined by approximately $134 million for the five-fiscal-year period from 2010-15.
This compares to last year’s report that annual ongoing costs for its investment operations declined by approximately $90 million for the five-year period from 2009 to 2014.
In the System’s review, the cost to manage the portfolio for Fiscal Year 2014-15 was approximately $1.4 billion, with external management fees contributing 91% of that figure. When excluding profit sharing fees to external managers, which can be volatile, the annual ongoing cost to manage the portfolio decreased by $44 million during the last fiscal year, and by $134 million over the past five fiscal years.
Contributors to the savings include transitioning assets from external managers to internal management when possible, reducing external management fees, and decreasing the number of external consultants and advisors.
CEM, an independent provider of objective benchmarking information, found that the annual cost to manage the CalPERS portfolio was approximately $52 million lower than its peers. CEM cited internal management of public assets, index-oriented management of equities, and lesser use of fund-of-funds as contributors to the cost savings.
“Reducing cost is a priority at CalPERS, as outlined in our Investment Beliefs,” says Henry Jones, CalPERS Board Vice President and Investment Committee chair.
“We continue to identify ways to reduce cost without compromising quality or efficiency,” adds Ted Eliopoulos, CalPERS’ chief investment officer. “I am thankful these efforts are making an impact, and I am optimistic we will continue to make meaningful reductions in the future.”
Russell to focus more on multi-asset solutions; Wilshire Consulting launches Wilshire ClimateLens; Hartford Funds to acquire strategic beta ETF provider.
The GSC&R team is charged with “integrating the firm’s
full breadth of asset-allocation expertise across regions and businesses,
enhancing its ability to design innovative strategies for multi-asset
solutions.”
Jeff Hussey, global chief investment officer at Russell Investments,
explains that investors increasingly want the asset management industry to
focus on their individual outcomes, “whether it’s increasing or preserving
funded status for a pension plan or building a reliable stream of retirement
income for an individual.” He says multi-asset solutions offer investors the “wide
range of levers required to meet one’s investing goals, particularly amid
volatile markets; and asset allocation is one of the most important
considerations for translating objectives into true outcomes.”
Kevin Turner,
a 21-year veteran of Russell Investments, has been appointed to lead the new
GCS&R team, reporting to Brian
Meath, global chief investment officer, multi-asset solutions. Turner,
who now holds the title of managing director, global head of client strategy and
research, most recently served as the head of consulting for the firm’s
institutional business in North America.
To present more information the firm’s new approach to
achieving investor outcomes through a multi-asset approach, Russell
Investments released this video.
NEXT: Wilshire
Consulting launches the Wilshire ClimateLens
Wilshire Consulting
launches the Wilshire ClimateLens
Wilshire Consulting announced the launch of Wilshire ClimateLens, a four-part
program designed to help clients understand and make informed decisions about
the risks and opportunities associated with climate change.
Wilshire ClimateLens was introduced with a new white paper, “ClimateChange:
Evolving Risks and Opportunities for Asset Owners,” co-authored by Wilshire
Consulting President Andrew Junkin. The Wilshire ClimateLens program
advises clients to approach climate change as a “broad exercise in risk
management, which includes both active engagement and thoughtful investment
solutions.”
As detailed in the paper, the four components of the
Wilshire ClimateLens program can be taken in sequence or, alternatively, can be
integrated individually into an existing strategic plan. They include:
Education: This introductory step provides a structured program explaining the
fundamental factors related to the intersection of climate change and
investing, including a review of climate science, possible resulting economic
consequences, and the risk-return considerations associated with policy and regulatory
responses.
Assessment:
The second phase involves the evaluation of current climate-related
investment and risk exposure in the context of investment objectives and
analyzes organizational capacity, including an assessment of governance and
policies, asset allocation, manager selection, engagement, and carbon
footprinting.
Planning: As a part of the process, Wilshire Consulting designs a strategic
blueprint to identify how asset allocation, investment process and policies,
risk management, governance, and operations could be modified to better manage
future exposure to climate risk and help capture climate-related opportunities
within a prudent decision-making framework.
Implementation:
At this stage, Wilshire Consulting executes mission-specific
climate-change-related actions that calibrate the portfolio to desired
risk-return targets while ensuring the adoption of best practices and
procedures.
NEXT: Hartford Funds to Acquire Lattice Strategies
Hartford Funds to Acquire Lattice Strategies
Hartford Funds announced that it has signed a definitive
agreement to acquire Lattice Strategies, an investment management firm and
provider of strategic beta exchange-traded funds (ETF).
This acquisition marks Hartford Funds’ expansion into the
ETF space, “adding robust investment management and product development
capabilities to its existing portfolio of actively managed mutual funds.”
“We are excited to acquire Lattice Strategies’ distinctive
ETF offering and investment capabilities, which we foresee being increasingly
demanded by financial professionals and their clients,” explains Jim Davey,
president of Hartford Funds. “The strategic beta space is a natural extension
of Hartford Funds’ actively managed platform, enabling us to enter a
fast-growing category that will serve as a foundation for growth in the
future.”
The acquisition, which is expected to close in the third
quarter of 2016, pending customary closing conditions, builds on Hartford
Funds’ active management platform and creates in-house investment and product
development capabilities for future ETF strategies. Lattice Strategies’
strategic beta ETFs seek growth through multi-factor security selection and the
deliberate allocation of risk.
In addition to these strategies, Lattice Strategies provides
a range of multi-asset solutions, including liquid endowments, alternatives,
equity, and income strategies. Upon completion of the acquisition, Hartford
Funds will maintain Lattice Strategies’ office in San Francisco and welcome
Lattice’s team of more than 20 professionals.