She desired innovation, she told the audience at its Sacramento headquarters. She wanted “stadium deals” and identified professional sports as a frontier for more investing.
Musicco’s attempt to import the so-called Canadian investment model, which emphasizes direct investments to reduce the fees paid to outside managers, didn’t sit well with key investing staff at Calpers, because there was no clear path communicated on how to do it, according to people close to the pension who were not authorized to speak publicly.
After cycling through a series of leaders, strategy shifts and a retreat from private equity in the decade after the financial crisis, the pension system’s portfolio is only 72% funded. Its next CIO will not only face intense pressure to restore the institution’s credibility and clout, but the cold math of hitting a 6.8% return target.
Yet grafting her version of the Canadian model onto Calpers proved challenging. In the US, public pension plans usually operate under constrained budgets and salaries. In Canada, there’s less scrutiny and they can lure buyout professionals more easily. Sports teams are “toys for billionaires” and a poor fit for a public pension fund, said Matt Cole, who left Calpers in 2022 after 16 years and now heads Strive Asset Management, the firm co-founded by Vivek Ramaswamy.
Calpers also pushed to invest $1 billion with investment firms TPG Inc. and GCM Grosvenor to back up-and-coming buyout firms. Some investment staffers thought this did the opposite of what Musicco was preaching in terms of trying to cut out the middlemen, a person familiar with the matter said.
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