CalPERS Shifting to Passive? (11/13)

Is CalPERS shifting to an all-passive portfolio? At ETF PM, we recommend a combination of strategic indexing and ETF trend following.

CalPERS’ investment beliefs arouse skeptics

By Marlene Satter, 10/15/13

CalPERS has long been known as a hands-on, activist-oriented pension fund, but its recently minted list of 10 investment beliefs seems to have stirred up some hostility among financial professionals.

Its spokesman calls much of the reaction “uninformed chatter.” After a protracted process, the largest public pension fund in the U.S. said it formally adopted its new beliefs to “provide a basis for strategic management of the investment portfolio, inform organizational priorities and ensure alignment between the Investment Office and CalPERS staff.”

Sounds harmless, right?

Not exactly. The news was greeted by plenty of criticism and even a bit of scorn, as various professionals in the financial field took CalPERS to task for adopting beliefs that were too vague and questioned the very process of determining those beliefs. Critics also said the pension fund was following a course that would move its investments toward an all-passive portfolio and thereby casting financial analysis to the wind.

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