CalPERS Partners with Standard Life, Aiming for Alpha

This is the inaugural deal for CalPERS’ multi-asset class partnership program.

(March 25, 2013) – The United States’ largest public pension plan has inked a $500 million deal with Standard Life Investments, officially launching its multi-asset class partnership program.

The $256 billion California Public Employees’ Retirement Fund (CalPERS) is investing the half-billion dollars in a new fund, which Standard Life will manage. The Scotland-based investment firm already has $272.6 billion in its care-a record high total for Standard Life.

CalPERS Chief Investment Officer Joe Dear said he and his team were “excited to have Standard Life on board as our first partner,” and called the firm’s investing approach “an excellent opportunity to add value” to the portfolio and investment operations.

CalPERS formally approved the strategic partnership program over five months ago, granting it up to 3% of the portfolio’s total assets, or nearly $8.2 billion dollars. Four external asset managers made the cut: Standard Life, AQR Capital Management, Pacific Investment Management Co., and AlphaSimplex Group. Negotiations with the firms began in July, a CalPERS spokesperson said at the time of the program’s approval.

The pension fund said it is pursuing two main objectives in teaming up with private asset managers. Firstly, the program is intended to outperform CalPERS as whole, using primarily public market assets, and achieving those returns with lower volatility and less risk. 

Secondly, the partnerships are meant to foster communication and information sharing between the management firms and CalPERS investment staff. The fund intends for this to “help develop scalable, sustainable, and efficient methods of increasing the likelihood of meeting long-term CalPERS investment return goals.”