Tuesday, May 15, 2018

CalPERS' CIO to Step Down?

Mark Anderson of the Sacramento Business Journal reports, CalPERS investment chief Eliopoulos to step down:
Ted Eliopoulos, the California Public Employees’ Retirement System’s chief investment officer for the past four years, said he will step down at the end of the year.

Eliopoulos said in a news release from the $355 billion asset fund that he is making the change to move to the East Coast to be closer to family.

“With two daughters in college, and one with health considerations that require my wife and me to be within reasonable distance, we have decided to relocate to New York City where they both will be in school,” Eliopoulos said. “Due to this fact, I will be stepping away from CalPERS by the beginning of 2019.”

The Sacramento-based pension fund said it has begun a search to find a permanent replacement.

“Eliopoulos will remain chief investment officer until a new CIO is named and assist in the transition through the end of 2018,” CalPERS said.

“Under Ted’s leadership, the investment office has greatly reduced the cost and complexity of the investment portfolio and increased transparency around fees,” said Marcie Frost, CalPERS' CEO, in the news release. “Because every dollar we save goes back into the fund, our members will directly benefit from those cost savings for years to come. Ted has always been guided by our fiduciary obligation to our members and the fund.”

Eliopoulos started with CalPERS in 2007 as senior investment officer for real estate. He was appointed interim chief investment officer in June 2013 and then as permanent chief investment officer in September 2014.

The chief investment officer oversees the fund’s investment portfolio and a team of 400 investment professionals. Eliopoulos implemented a plan, called the Vision 2020 Strategic Plan, to reduce the complexity of the pension fund’s portfolio, to reduce fees and to better manage risk.
CalPERS put out a press release on Monday, Chief Investment Officer Ted Eliopoulos to Leave CalPERS:
The California Public Employees' Retirement System today announced that Ted Eliopoulos, CalPERS' chief investment officer (CIO), is leaving the pension fund in order to relocate to the East Coast to be closer to family. A search for his permanent replacement will begin immediately.

Eliopoulos will remain chief investment officer until a new CIO is named and assist in the transition through the end of 2018.

"With two daughters in college, and one with health considerations that require my wife and me to be within reasonable distance, we have decided to relocate to New York City where they both will be in school," said Eliopoulos. "Due to this fact, I will be stepping away from CalPERS by the beginning of 2019."

"It's been extremely rewarding to have helped steward an investment institution that serves so many hardworking and deserving California families. I am confident the transition to a new CIO will be seamless as I leave the office in the hands of some of the most skilled investment professionals in the industry," Eliopoulos said.

"Under Ted's leadership, the investment office has greatly reduced the cost and complexity of the investment portfolio and increased transparency around fees," said Marcie Frost, CalPERS CEO. "Because every dollar we save goes back into the fund, our members will directly benefit from those cost savings for years to come. Ted has always been guided by our fiduciary obligation to our members and the fund."

As CIO, Eliopoulos managed an investment portfolio of more than $350 billion, comprising both public and private assets, and a team of nearly 400 investment professionals. During his tenure, Eliopoulos implemented the Vision 2020 Strategic Plan, which sought to reduce the complexity of the portfolio, reduce fees, and better manage risk.

As CIO and as head of the CalPERS Real Assets program before that, Eliopoulos focused on reducing external managers, ensuring only strategic partnerships were retained. This included reducing the number of external real estate managers from 90 to 15 and external managers from approximately 400 in 2007 to about 140 today. As a result, today more than 70 percent of CalPERS' assets are managed internally. Eliopoulos also ended the hedge fund program at CalPERS in 2014, saving significant fees for the pension fund.

Under Eliopoulos' leadership, CalPERS established its first Emerging Manager Plan in 2012 and the Investment Office's first Diversity & Inclusion Committee in 2016. He also established CalPERS' first Governance and Sustainability Plan and the Opportunistic Credit Program in 2016.

Eliopoulos joined CalPERS in 2007 as senior investment officer for the Real Estate division and the Real Assets unit. Following the financial crisis, he led the effort to restructure the asset class, refocusing on core investments in real estate and infrastructure that generated stable returns. He continued this work across all asset classes when he was appointed interim CIO in June 2013 and later as the permanent CIO in September 2014.

"Ted's commitment to the long-term health of the Fund has been unwavering," said Henry Jones, chair of the Investment Committee. "It has been an honor to work with him, and we are incredibly grateful for his service to California over the past decade."

"Ted leaves the Investment Office in a better place," said Priya Mathur, CalPERS board president. "He has managed risk, negotiated lower fees with external managers, and set the Fund up for success moving forward. On behalf of all of us on the Board, we wish him much success and happiness as he starts the next chapter in his life."

About CalPERS

For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 1.9 million members in the CalPERS retirement system and administers benefits for more than 1.4 million members and their families in our health program, making us the largest defined-benefit public pension in the U.S. CalPERS' total fund market value currently stands at approximately $355 billion. For more information, visit www.calpers.ca.gov.
In my opinion, there is no doubt Ted Eliopoulos did a great job at CalPERS. Not only did he nuke the hedge fund program in 2014 -- a very wise decision given that program wasn't delivering absolute returns and was costing them a bundle on fees -- he also consolidated external managers in real estate and private equity, focusing on fewer relationships to lower fees and get more bang out of their investment bucks.

Ted was also instrumental in lowering CalPERS' discount rate to 7%, a decision which was needed but wasn't very popular with unions and cities.

It's worth noting long before Ted Eliopoulos took over as CIO, CalPERS was a big mess. It was everybody's cash cow, giving money left, right and center to external managers and this terrible approach watered down returns.

I know for a fact that when Réal Desrochers took over as head of private equity at CalPERS, there were way too many funds and relationships. During his tenure, Réal tried to cut these down to size and focus on a few key relationships but the titanic was sinking and all he could do is rearrange the chairs on deck.

Ted Eliopoulos did a great job in private markets and I believe he was on his way to cleaning up the private equity portfolio with a little help from BlackRock.

I never spoke to Ted Eliopoulos. He's on my email distribution list and once asked me if I can put him in touch with Ron Mock, CEO of the Ontario Teachers' Pension Plan, which I gladly did.

He always struck me as a smart, serious, and decent man which is why when I read the garbage Yves Smith (aka, Susan Webber of Aurora Advisors) posted on the naked capitalism blog, I was struck by her ignorance and more shockingly, her total lack of empathy.

The statement CalPERS released states that one of his daughters has health considerations that require both parents. I hope she's doing well but as someone who has battled multiple sclerosis (MS) for 20 years, I know what that means because if I didn't have my parents and support network, I'd be finished and I'm not ashamed to admit this.

You have to be a particularly vile human being (or angry, self-loathing?) to put out the garbage Yves Smith posted on her blog, without even mentioning the part of his daughter needing both parents.

Anyway, I had it with Yves and her mission to "expose private equity", all she does is expose her ignorance on an asset class she knows very little about.

Some of you may think I'm defending Ted Eliopoulos because he donated to my blog or because he's Greek American. First, he never donated a dime to my blog, someone from CalPERS' Administration asked me to fill out papers a few months ago and I never heard back from them.

As far as Ted's Greek roots, that too has nothing to do with it. He could have been Jewish, Indian, Pakistani, Chinese or whatever, I call them as I see them but yes, I'm always proud to see successful Greeks in finance and other fields.

In March, I was saddened to learn that Blackstone's co-founder, Pete Peterson, died at the age of 91:
The son of Greek immigrants, Peterson served as U.S. Commerce secretary under President Richard Nixon and assembled contacts and diplomatic skills that he used to become a leading architect of international business deals. After a tumultuous turn at Lehman, he teamed with Stephen Schwarzman to create Blackstone, and helped make it the world’s largest private-equity firm.

When Blackstone went public in 2007, Peterson became a billionaire. He accumulated an estimated net worth of $2 billion, according to Forbes magazine.

‘Great Partner’

“Pete and I worked together for 35 years,” Blackstone CEO Schwarzman said Tuesday in a phone interview. “He was a great partner. We both had no idea when we started Blackstone in 1985 that the firm would grow to this scale and importance. The firm was his pride and joy.”

Like other Wall Street figures such as Felix Rohatyn and David Rockefeller, Peterson bridged finance and public policy throughout his business career. He was chairman of the Council on Foreign Relations for two decades and co-founded the Concord Coalition, a nonpartisan advocacy group, to sound the alarm about mounting government deficits.

“Pete Peterson was one of the great patriots and philanthropists of our time, and he was a great friend whom I deeply admired,” Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP, said in a statement. “He brought people of different backgrounds together to tackle some of the toughest challenges facing our country, and he was often a lonely voice for fiscal responsibility when others were kicking the can down the road.”
Michael Bloomberg was right to praise Pete Peterson, not only was he a great patriot, he knew the meaning of enough and devoted a lot of his time to philanthropy.

Today, the Pete Peterson Foundation lives on and shines a light on an issue close to Peterson's heart, America's unsustainable fiscal profligacy. I still have an autographed copy of his book, Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It, which Réal Desrochers gave me as a gift.

Anyway, I wish Ted Eliopoulos all the best as he prepares to wind things down at CalPERS and move on to something new. I have a few Canadians which I think can do an outstanding job as CIO at CalPERS. Not sure they're interested in the job but will definitely put them in touch with Ted Eliopoulos.

Below, an older clip where Ted Eliopoulos talks about the CalPERS Investment Office. And Pete Peterson talks about the meaning of enough. They don't make guys like him anymore, that's for sure.


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