California Pension fund
💸 $300B+ Public Pension Fund based in California practices sustainable investing, allocating capital to create positive ESG impact.
The insights below come from a conversation with Chris Ailman, CIO of one of the largest Public Pension Funds in the US.
🧠 Investment Philosophy
Long-term, patient capital: 100-year time horizon, and look for net cash flow + capital gain potential, at a reasonable price.
Sustainable investing: Allocate capital to create positive environment, social and governance (ESG) outcomes, while generating financial returns (7% hurdle rate).
📊 Portfolio Construction
40% public equity
15% real estate
15% private equity & venture capital
10% fixed income
10% risk mitigation strategies
5% cash / liquidity
5% innovative strategies and others
🚀 Venture Portfolio
Investing through a fund-of-funds vehicle, focused on emerging managers (funds I/II/III).
No direct investments due to reporting requirements of a public pension fund.
🔮 Looking Forward
Exploring investments that create positive social impact, while delivering 7%+ financial return
Climate change
Diversity & inclusion
Promoting sustainable business practices & public policies
✍🏼 Lessons Learned
Buy low, sell high: Follow Warren Buffet’s advice
Rebalance portfolio: Review asset allocation and adjust at key inflection points
Can’t predict the future: Global pandemic was on list of major risks since 2008, but could not have predicted the market rally of 2020/21
Culture trumps capabilities: Pay attention to culture during times of transition
“Stick to asset allocation, rebalance smartly, and build great teams”
🙏 Special thanks to Chris Ailman for sharing his invaluable insights (posted with permission).
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