CalPERS’ next decade could hinge on its co-investment programme
The US’s largest public pension is right to want to better align itself with managers to access the highest-quality assets.
By Adam Le
A successful co-investment programme can play a key role in a private equity portfolio beating its public benchmark equivalent. On the other hand, such a strategy can invite adverse-selection risk.
So says Stephen Gilmore , the new chief investment officer for the California Public Employees’ Retirement System .
“The history with co-investments is that it’s not always clear that actually not paying fees leads to better after-fee outcomes, because you could be getting inferior investments,” Gilmore said at the pension’s board meeting this week.
This is a complex argument that deserves more exploration. To be fair, Gilmore didn’t delve as deeply into the topic as he may have wanted to during the public board meeting. Private Equity International contacted CalPERS for more context around Gilmore’s comments. Here’s what a spokesperson told us...
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2 个月Interesting. In the context of strategic asset allocation, co-investments can offer significant advantages, particularly in terms of cost savings, access to exclusive opportunities, and potential alignment with long-term goals. However, the risks of illiquidity, concentration, and increased due diligence should be carefully managed to ensure they align with the investor’s overall asset allocation strategy.