Calpers taps former New Zealand sovereign fund executive as investment chief

The California Public Employees’ Retirement System has named a former top executive at the New Zealand sovereign wealth fund to direct the largest US public pension plan’s investments following the abrupt departure of two of his predecessors.

In a statement on Tuesday, the $494bn pension fund said Stephen Gilmore, the former chief investment officer of the NZ$73bn (US$43.5bn) New Zealand Superannuation Fund, would become its new CIO in July, ending a seven-month vacancy in the top position.

Calpers chief executive Marcie Frost said: “Stephen has worked in very public roles during his career for organisations where transparency and resiliency are essential.”

“He brings not only a wealth of investing knowledge to the job, but he also has the temperament to understand the needs of our members and public sector employers who depend on Calpers to be a steady, long-term partner,” she added.

The appointment of Gilmore, who will manage more than 300 investment professionals, came after two of his predecessors at the pension plan, Nicole Musicco and Ben Meng, stepped down within two years of becoming CIO amid lacklustre returns and political intervention.

Gilmore “has a fine reputation”, said Richard Ennis, founder of Ennis Knupp & Associates, a consultancy that works with public pension plans, adding that his “first challenge” would be to generate the excess returns that Calpers had failed to achieve for more than a decade.

The Sacramento-based pension giant has in recent years been grappling with mediocre performance and a low funding status. The pension plan reported an annual return of 5.8 per cent in the 12 months ending June 2023 following a negative 6.1 per cent in the previous year. That fell well below the 6.8 per cent target.

The underperformance contributed to a 72 per cent funded ratio last year, compared with a national average of 78 per cent, according to Equable Institute, a New York-based think-tank.

Gilmore came to Calpers with a stellar record as the New Zealand Super Fund under his leadership reported annualised returns of more than 10 per cent over the past decade.

Before joining the New Zealand Super Fund in 2019, Gilmore was chief investment strategist at Australia’s Future Fund, another sovereign wealth fund where he managed portfolio strategy and overlays as well as investment risk. He has also held roles at AIG Financial Products, Morgan Stanley, the IMF and the Reserve Bank of New Zealand.