Professional Documents
Culture Documents
Submission Date :
Lecturer
Assignment
WEEK 4
Dr. Khairul Anuar
Student name:
Anas ALhajjar
Student ID:
110037722
Semester
I hereby attest that the contents of these attachments are my/our own work.
Referenced work, articles, arts, programs, papers or part thereof are acknowledged at
the end of this paper. This includes data excerpted from the Internet, other private
networks, other peoples disk or computer systems.
DATE
: ________________
TIME
: ________________
RECEIVERS NAME :
________________
Instructions:
The
most important best practice drawn from this case study is that success in pension
fund investment in urban revitalization is measured in terms of the risk-adjusted rate
of return rather than social impacts obtained. To paraphrase Lowenstein (1996), we
manage what we measure. Such focus allows the fund managers to meet their
fiduciary responsibilities without distraction. This is also the best way to benefit the
community, since theory suggests that, by filling capital gaps, the investor should both
receive excess returns and support economic development. If the investor does not
receive an appropriate return, it may be that they are not filling a true capital gap (i.e.
a gap that an efficient market would have funded), but are instead investing in
projects that an efficient market would have left unfunded. Calabrese (2001) lists the
comparability of fund returns to an appropriate benchmark as one of the common
characteristics of leading successful alternative investment programs. CalPERS does
not make concessions on risk/return criteria.CalPERS is the largest public pension fund
in the United States with approximately $275 billion in global assets and equity
holdings in over 9,000 companies. CalPERS provides retirement benefits to more than
1.6 million public workers, retirees, their families and beneficiaries and we rely on the
quality and integrity of market information to allocate capital on behalf of our
beneficiaries. Recently, CalPERS developed a set of Investment Beliefs that are
designed to provide a basis for strategic management of the investment portfolio.
Included in CalPERS Investment Beliefs is the view that Long-term value creation
requires effective management of three forms of capital: financial, physical and
human. CalPERS believes that strong governance, along with effective management
of environmental and human capital factors, increases the likelihood that companies
will perform over the long-term and manage risk effectively.
A long time investment horizon is a responsibility and an advantage Long time
horizon requires that CalPERS:
Consider the impact of its actions on future generations of members and taxpayers.
Encourage investee companies and external managers to consider the long-term
impact of their actions.
Favor investment strategies that create long-term, sustainable value and recognize
the critical importance of a strong and durable economy in the attainment of funding
objectives.
Advocate for public policies that promote fair, orderly and effectively regulated
capital Markets.
Long time horizon enables CalPERS to:
Invest in illiquid assets, provided an appropriate premium is earned for illiquidity
risk.
Invest in opportunistic strategies, providing liquidity when the market is short of it.
Take advantage of factors that materialize slowly such as demographic trends.
Tolerate some volatility in asset values and returns, as long as sufficient liquidity is
Available.
Sub-beliefs:
Governance is the primary tool to align interests between CalPERS and managers of
its capital, including investee companies and external managers.
Strong governance, along with effective management of environmental and human
capital factors, increases the likelihood that companies will perform over the longterm.
and manage risk effectively
CalPERS
may
engage
investee
companies
and
external
managers
on
their
CalPERS will seek to capture a larger share of economic returns by using our size to
maximize our negotiating leverage. We will also seek to reduce cost, risk and
complexity related to manager selection and oversight
When deciding how to implement an investment strategy, CalPERS will implement
in the most cost effective manner
assets
among
different
investment
categories.
The
ratio
is
typically
determining the appropriate asset allocation mix. Our goal is to maximize returns at a
prudent level of risk - an ever-changing balancing act between market volatility and
long-term goals.CalPERS follows a strategic asset allocation policy that identifies the
percentage of funds to be invested in each asset class. Policy targets are typically
implemented over a period of several years on market declines and through dollar
cost averaging.
(c) investment classes :
As the nation's largest public pension fund with assets totaling $277.2 billion as
of October 31, 2013, CalPERS investments span domestic and international
markets.The CalPERS Board of Administration has investment authority and
sole fiduciary responsibility for the management of CalPERS assets. With the
Board's guidance, the CalPERS Investment Committee and Investment Office
carry out the daily activities of the investment program.CalPERS has generated
strong long-term returns by effectively managing investments to achieve the
highest possible return at an acceptable level of risk. The CalPERS portfolio is
diversified into several asset classes, so any weaknesses in one area are
offset by gains in another. The Board follows a strategic asset allocation policy
that targets the percentage of funds invested in each asset class.
(d) ethics :
the
public
complete
confidence
in
the
Systems
investment
decision
making process and ensure the CalPERS Board is meeting its fiduciary duty.
to
incorporate
risk
management
integrate
targeting
process.The
expected
and
returns
with
measurement
Investment
Committee
risk
into
management
the
receives
daily
and
to
portfolio
quarterly
risk
updates based on these risk measures. The Committee also receives analysis
of the risk impact to CalPERS Total Fund of new investment strategies. Risk
management
at
CalPERS
will
continue
to
be
an
integral
and
evolving