CalPERS to make $900m in infrastructure commitments

The California Public Employees' Retirement System is planning on making $900 million in commitments to infrastructure funds in 2010, according to a presentation prepared for the investment committee of the $205.8 billion pension plan.

At the same time, the pension will continue to build out its direct investment capabilities and may invest up to $400 million into infrastructure assets on its own, according to the presentation.

The initiatives, disclosed Monday, are part of a broader objective for the pension to establish itself as a “premier infrastructure investment manager”, according to the presentation.

CalPERS already has $700 million committed to the asset class, which has a target allocation of 1.5 percent of CalPERS' total market value through 2010, with a range of .5 percent to 3 percent.

Of that $700 million, $400 million was transferred from CalPERS’ real estate and private equity asset classes. That included a $200 million commitment to the CIM Infrastructure Fund and two commitments of $100 million each to Carlyle Infrastructure Partners and Alinda Infrastructure Fund I.

Meketa Investment Group, the pension’s infrastructure asset class consultant, said in an attachment to the committee presentation that CalPERS’ infrastructure portfolio has returned a 13.9 percent return, net of fees, for the year ended 30 September, 2009. The portfolio has achieved a return of 3.2 percent since its inception in 2007, Meketa said.

CalPERS’ performance benchmark for infrastructure is about 6 percent.

Meketa also said CalPERS made “meaningful progress” in 2009 toward meeting its goal of being able to invest directly in infrastructure. The pension hired two portfolio managers, Todd Lapenna and Christine Yokan, bringing its total infrastructure investment staff to five people.

But making direct investments “on the scale anticipated by CalPERS” will require additional resources and the development of internal processes to support such a program, Meketa added.