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CalPERS CIO on Recovering Assets

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    CalPERS CIO Joseph Dear on how he manages the largest U.S. pension fund.

  • Duration 3:14
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-- that's alright calpers is the pension -- for California public employees.

236 billion dollars and assets one point six million members the largest pension fund in the US.

David -- is alive at the Milken global conference with the chief investment officer of calpers Joseph dear David.

Thank you very much finished -- imagine coming into this fund.

Which had been is as high as 260 billion dollars in 2007.

Imagine coming in after of them lost a tremendous amount of money about seventy billion dollars that was -- it.

160 billion because of the financial crisis that's how much money it was.

And that was when Joseph -- -- -- in 2009 and took over calpers.

And has managed to get that fund backup to 235.

Billion still not what it was at the height in 2007 -- but.

You've done a tremendous job getting it up probably done it.

-- help -- lot of this is the market -- but.

Came -- to calpers and organization had really been hit by the global financial crisis.

So we did what you would do in any circumstance what went wrong what we learned from that.

And how we apply those lessons let me stop -- with a first look what went wrong -- my understanding what went wrong is the politicians promise.

A lot more.

To the retirees than could be fulfilled and at the same time required paying into that fund a lot less.

So they were offering more and getting less that's that's it does -- of disaster.

Where you got out asset management question in -- liability question right on the asset -- So the global financial crisis to us -- we had more risk in the portfolio than we knew about.

Thanks so we were taking.

Uncompensated -- how did that show up our real estate portfolio and a liquidity crunch and men in here in.

Typical.

Economic crisis and you don't have enough liquidity you have to sell.

Your most liquid assets that the worst possible time and we should mention by the way when you were flush when you had 260 billion dollars.

You were over -- if you had a 110%.

Of what was old now your underfunded by about 70% so how do you make up the difference -- -- to do it slowly patiently and with discipline so.

Bring in investment program due to work that has the appropriate matter -- and we've reduced our expected greater return to seven and a half percent.

And then invest for the long term.

So we have a difficult environment now right I -- low low low interest rates and equity returns are not forecast to be really great in the near term.

We have a long horizon.

And you look around like at this conference is science the economic growth in the emerging markets.

I think it's you can count on -- long term to have -- our capitalist system broke its resilience.

And build a program that's gonna take advantage of that there will be there but are the politicians on board because they're gonna have to they're either gonna have to raise taxes or face the music -- public employees and say we can't pay you what we -- debate.

For the liabilities it'd been created don't exist there it -- -- some changes contract law.

Those liabilities are there so really gonna pay formed new investment.

For pay for them through higher contributions.

From here we've got to leave it -- -- chief investment officer for calpers great to have you -- here now.

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