Fantastic article discussing how the nation’s largest public pensions is planning to leverage existing assets in a low-yield environment to close a funding shortfall. From Reason Foundation: “CalPERS recently announced the fund will take a new path to hit its assumed investment return target of 7% by embracing a new 2-pronged investment approach that combines a push towards higher earnings & riskier assets with the ability to leverage the fund to retain liquidity when market opportunities present itself & borrowing costs are low.”

Indeed, “the board decision will allow CalPERS’ investment office to strategically use leverage (borrowing) to infuse the fund with cash to make investments at times when administrators seek to avoid liquidating other investments already in the CalPERS portfolio.”

The key, in our estimation, is having more accurate pricing real-time on an existing portfolio of private-equity or commercial real estate assets. Better data on private assets and frequent price discovery using our valuation-as-a-software service provides a solution. As the report states: “CalPERS isn’t “borrowing to double down on risk”. Rather, they’re making an investment decision to take on more private equity investment.”

Read the full post on LinkedIn