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Canadian Nicole Musicco has been named the new chief investment officer of the California Public Employees’ Pension Retirement System (CalPERS), the largest U.S. public pension plan with nearly US$500-billion in assets – bigger than any pension fund in Canada.
Ms. Musicco joins CalPERS from RedBird Capital Partners, where she led the Toronto office of the New York-based investment firm. Before that, she spent just over a year managing the private markets investment program at Investment Management Corp. of Ontario – a money manager for several Ontario pensions and government funds – and 16 years with the Ontario Teachers’ Pension Plan. At Teachers, she led both the private equity and public equity investment teams and was also head of the Asia/Pacific region.
CalPERS says Ms. Musicco is only the second woman to lead its investment operations. In her new role, which she starts March 28, she’ll report directly to chief executive officer Marcie Frost and lead a team of 300. In a statement, Ms. Frost cited Ms. Musicco’s “experience, vision, and skill as an investor in public and private markets” as being “critical” for CalPERS, which has two million members.
CalPERS hopes Ms. Musicco will help its assets catch up to the amount of benefits it owes its retirees. Its funded status – the ratio of assets to liabilities – is just 80 per cent, although that is up from 60 per cent five years ago.
CalPERS says as part of its plan to boost returns, it will increase its private equity investments to 13 per cent of its portfolio from 8 per cent and add a private debt allocation of 5 per cent.
Despite their size, many major U.S. public pensions have been slower than their Canadian peers to invest in certain types of private assets, particularly using the expertise of their own staff rather than outside partners.
At Jan. 31, CalPERS had US$481.8-billion in assets, with nearly half coming from publicly traded stocks and more than a quarter coming from bonds and other income investments. Each of the private equity and real asset classes made up about one-10th of the fund, according to monthly asset disclosure.
In a statement, Theresa Taylor, president of the CalPERS board, said “We are getting the investor we need to skillfully manage our investment portfolio on behalf of our members, now and in the future.”
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