Calpers’ Performance Fees to Wall Street Rise 6% as Assets ClimbMichael B. Marois
The California Public Employees’ Retirement System’s performance fees to Wall Street firms rose 6 percent last year to $420 million as the value of its portfolio gained 18 percent.
Managers in the real asset portfolio, which includes real estate, infrastructure and forest land, earned $261 million in profit-sharing fees in the year ended in June, according to a report Monday by Chief Operating Investment Officer Wylie Tollette. The fund didn’t report performance fees for private equity, which accounts for 10 percent of its $304.5 billion in assets and more than half of all base fees paid last year, Tollette said.
Calpers, as the largest U.S. pension is known, said profit-sharing fees have more than tripled since it began to recoup losses brought on by the recession that ended in 2009. Since then, the fund’s market value has grown 60 percent.
While the payments pegged to investment gains have jumped, the fund has reduced other types of money-management fees as it seeks to cut costs.
Calpers said base fees to external money managers, which are tied to the amount invested, were $798 million in the 2014 fiscal year, down 12 percent from 2009. The fund cut such payments by reducing the number of firms it hired, putting its staff in charge of more investments and seeking better terms from outside firms.
Calpers announced in September that it planned to dump its entire $4 billion in hedge-fund investments, citing their expense and complexity.