Calpers Seeking Opportunities to ‘Participate’ in TARP

By Saeromi Shin

April 15 (Bloomberg) -- The California Public Employees’ Retirement System said it’s seeking opportunities to “participate” in the U.S. government’s Troubled Asset Relief Program.

Calpers, as the largest U.S. public pension manager is known, is also setting aside funds amid the credit crunch and is ready to “deploy capital,” according to the text of a speech by Henry Jones, a Calpers board of administration member, that will be delivered in Seoul.

“We are looking at opportunities to participate in the Troubled Asset Relief Program established by our federal government to purchase assets and equity from financial institutions,” according to the speech. He added that “we’re setting aside billions of dollars of cash to stay flexible and ready to deploy capital.”

Calpers’s cost of managing its investments declined to the lowest level since 2004 after the value of fund holdings fell 27 percent this fiscal year, and it projects its investment costs will fall to $817 million in the 12 months that begin July 1, down from $1.04 billion last year, according to a report that will be presented to the fund’s governing board. That is the lowest since the fund spent $523 million in the fiscal year that ended June 30, 2004.

Calpers, with $175 billion in assets as of April 13, reached a record high of $260 billion in October 2007. The fund provides pension and health benefits to 1.6 million government workers, retirees and their families.

The fund’s real estate holdings, as well as its alternative investment classes such as hedge funds and private equity, were the most expensive, according to the report. The real estate portfolio is expected to cost $362.9 million this fiscal year, with alternative investments at $307 million.

The Sacramento, California-based fund invests 7.6 percent of its funds in cash, a category that calls for no allocation under targets established in December 2007, according to its Web site. The fund’s bond investments represent 24.8 percent of the total, more than the 19 percent target. It’s underinvested in equities, with 53.5 percent allocated there compared with a target of 66 percent.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net