▶Multiple sources confirm CalPERS is undergoing a significant strategic overhaul centered on the Total Portfolio Approach (TPA), driven by new CIO Stephen Gilmore. This involves a new reference portfolio, a revised active risk target, and a focus on a whole-of-portfolio view.Apr 2026
▶There is agreement that CalPERS's immense scale ($600 billion) is a defining characteristic that shapes its investment strategy, enabling certain advantages like co-investments but creating challenges in areas like investing in emerging managers.Apr 2026
▶Sources indicate that internal governance and operational changes are critical enablers of the new investment strategy. Specifically, a shift to total-portfolio-based compensation and a multi-year technology simplification are cited as foundational to the TPA transition.Apr 2026
▶CalPERS is refining its private markets strategy, with a clear emphasis on increasing co-investments alongside major GPs and a stated intention to avoid significant activity in direct private investments.Apr 2026
▶There is a contrast between the current optimism surrounding the implementation of the Total Portfolio Approach and the historical reality that a previous, post-2008 attempt to implement a sophisticated factor-based asset allocation model was not fully successful.Apr 2026
▶A tension exists between CalPERS's historical investment behavior, which has been described as value-detracting and pro-cyclical (e.g., de-risking during the 2008 crisis), and the new TPA framework's goal of establishing a more stable, long-term risk appetite.Apr 2026
▶While CalPERS's private equity strategy has been successful since 2022, its reliance on large managers due to its scale makes it difficult to access potential alpha from smaller, emerging managers, presenting a potential opportunity cost.Apr 2026
▶The previous Strategic Asset Allocation model delegated approximately 450 basis points of active risk, whereas the new TPA model targets a range around 400 basis points, suggesting a potential tightening or redefinition of the fund's risk budget and management discretion.Apr 2026
Not enough data for timeline
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