The California Public Employeesâ Retirement System (CalPERS) have planned to pay fund managers on a performance only basis because of underperformance in a move that could potentially shake up the industry. The proposal was an information item presented to the CalPERS Investment Committee on Monday and was part of a proposed restructuring of the $1bn Global Equity asset class. This allocation includes mostly stock index funds managed by external managers and internal staff. A spokesperson for CalPERS said the giant fund had found it was paying external managers fees and performance incentives but essentially getting beta and not enough alpha in return. âThe staff proposal is to move non-alpha-producing externally managed funds under management by CalPERS staff, which already manages index funds as well and to put remaining external managers on a performance-only basis, no alpha, no pay,â said the spokesman. http://globalpensions.com/?id=me/17/news/28/48307/38/
Of course this would drastically reduce their allocation to Renaissance, AHL, Tudor, Winton, Soros, Sequoia, Kleiner Perkins, et al., who would tell CalPERS to pound sand.