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CalPERS Generates 2.4% Return for FY 2015

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California Public Employees’ Retirement System (CalPERS) returned 2.4% in fiscal year 2015 – ended June 30th, 2015. This was CalPERS’ worst performance since 2012 when it generated a 1% return. Listed equities were a major drag on performance, along with private equity. The pension giant had an internal goal of 2.5%, far below its targeted long-term pension return of 7.5%. At June 30th, CalPERS had a bit more than US$ 301 billion in assets. Other pensions globally have fared better. Japan’s GPIF, the largest pension in the world, earned 12% in the year ended March 31.

“Despite the impact of slow global economic growth and increased short-term market volatility on our fiscal year return, the strength of our long-term numbers gives us confidence that our strategic plan is working,” said Ted Eliopoulos, CalPERS Chief Investment Officer in a press release.

CalPERS is in the midst of a significant re-organization regarding its investment office. The pension system dropped hedge funds and is looking toward reducing alternative asset manager relationships – essentially halving them by 2020. CalPERS is also putting up its timberland assets for sale. Those assets generated a -0.3% return in FY 2015.

Asset Class Returns

Asset Class FY 2015 Return Performance Against Benchmark
Public Equity 1.0% (31) bps
Private Equity 8.9% (221) bps
Fixed Income 1.3% 93 bps
Real Assets 12.4% 90 bps
1. Real Estate 13.5% 114 bps
2. Infrastructure 13.2% 932 bps
3. Forestland -0.3% (1,094) bps
Liquidity 0.90% (77) bps
Inflation Assets -11.5% 147 bps
Total Fund 2.4% (9) bps

Source: CalPERS

RDIF and Makara Capital form Technology Company Investment Joint Venture

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The Russian Direct Investment Fund (RDIF) and Singapore-based Makara Capital, a specialist in transaction financing and asset management, signed a deal to form a US$ 200 million joint investment platform to finance breakthrough innovative projects in Russia and Asia. Ali Ijaz Ahmad, the CEO of Makara Capital, is a board director of the Intellectual Property Office of Singapore (IPOS). Ali Ijaz Ahmad served as an adviser to Morgan Stanley and The Carlyle Group. He also had stints at the World bank and Goldman Sachs. Makara Capital was founded in 2005 as a joint venture with Credit Suisse AG and made independent by its founding partners in 2008.

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SVB Financial Group to Acquire Leerink Holdings

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Linking Boston to the San Francisco Bay Area in the world of pharmaceuticals, SVB Financial Group (SVB) announced that it has entered into a merger agreement to acquire Leerink Holdings LLC, the Boston-based parent company of Leerink Partners LLC, an investment bank focused on the healthcare and life science industries. Jeffrey A. Leerink formed Leerink in 1995. Santa Clara, California-based SVB Financial Group is the parent company of Silicon Valley Bank. SVB is big into life sciences and provides services to many healthcare companies and startups.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Digital Currencies Gaining Steam Among Central Banks

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At the Singapore Fintech Festival, International Monetary Fund head Christine Lagarde noted that central banks should consider issuing digital currency, as non-cash payments increased over the years – especially in developed markets. Digital currencies, also known as cryptocurrencies, such as bitcoin have lost tremendous value in recent months. Lagarde is referring to having the central bank issue digital currencies. Lagarde argued that a digital currency would be the liability of the state and not a private company. Saudi Arabia, China, Canada, Sweden, and even Uruguay have tinkered with possibly having digital currencies or some form. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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