Calpers looks to boost “under resourced” private debt team

The US’s largest pension fund’s private debt team is “considerably under resourced” and needs to hire if it wants continued success, according to a quarterly report.

The California Public Employees’ Retirement System (Calpers) increased its target private debt allocation from five per cent to eight per cent in March. And although the team has made strong progress in building up its allocation, there is still some way to go.

As of the end of March, Calpers’ private debt portfolio consisted of 41 underlying investments worth approximately $33bn (£25.9bn) of commitments, with an aggregate market value of approximately $12.8bn. This made up approximately 2.6 per cent of Calpers’ total portfolio.

Read more: US pension fund Calpers to boost private debt exposure

The private debt programme was officially set up on 1 July, 2022, however underlying investments were held in a different programme before that. Over one year to the end of March, the private debt portfolio returned 14.8 per cent  and it has outperformed the policy benchmark since 1 July 2020, according to investment advisory firm Wilshire.

However, in a report, Wilshire pointed out that additional resources, both on the personnel and technological sides, will be critical to maintain the success of the programme. There are currently five outstanding hires across the team, the report noted.

A business update from Calpers mentioned that it is continuing to grow the team and recruiting investment staff.

Its other priorities include diversifying its portfolio’s geographical exposure by looking at opportunities outside of North America; and continuing to negotiate no fee, no carry co-investment funds.

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