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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

Saudi Aramco Contemplates SABIC Stake from PIF

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Oil giant Saudi Aramco is in early discussions on whether to pursue an ownership stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund (PIF). At the moment, Saudi Aramco has no plans to buy publicly-held shares of SABIC. SABIC was founded in 1976 by Saudi royal decree to convert oil by-products into useful chemicals, polymers, and fertilizers.

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SWFI First Read, July 19, 2018

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GIC Eyes Provenance Land

GIC Private Limited is nearing a deal to purchase up to 50% of Provenance Land. Provenance Land owns India’s first Four Seasons hotel.

Eduard van Gelderen Leaves UC Regents for PSP Investments CIO Role

Eduard van Gelderen exited his position as Senior Managing Director at the University of California Regents’ Office of the Chief Investment Officer. His role will not be replaced. He accepted an offer to be Chief Investment Officer of the Public Sector Pension Investment Board (PSP Investments).

PAAMCO Prisma Holdings CEOs to Exit

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Google Fined Big Time by EU Regarding Antitrust Violations

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The European Union (EU), through its competition commissioner, levied a €4.34 billion fine against Alphabet Inc., the owner of Google. The fine is over Google having “imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search,” according to the European Commission (EC).

The European Commission is requiring Alphabet to cease from its conduct that it is accused of within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.

Commissioner Margrethe Vestager, in charge of competition policy, said in a press release, “Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans. Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine. In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”

The EC press release added, “In particular, Google: 1. has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store); 2. made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and 3. has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called “Android forks”).”

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