Key Takeaways
- • CalPERS, the $653.8bn California public pension fund, is exploring a potential return to hedge fund investing through separately managed accounts (SMAs), 12 years after exiting the sector in 2014, according to Pensions & Investments.
- • Correspondence obtained through a public records request shows CalPERS has held discussions with Goldman Sachs and Dockside Platforms about hedge fund exposure via SMAs.
- • June Kim, CalPERS' deputy chief investment officer for capital markets, is reportedly leading the review, and no decision has been made on resuming hedge fund investing.
- • The 2014 exit liquidated investments across 24 hedge funds and six funds of hedge funds as part of an effort to reduce portfolio complexity and investment costs.
- • A renewed allocation would be a significant strategic shift for one of the world's largest public pensions, arriving amid renewed institutional interest in hedge funds for diversification and downside protection.
Summary
The California Public Employees' Retirement System (CalPERS) is assessing a potential return to hedge fund investing through separately managed accounts, 12 years after its high-profile withdrawal from the asset class, according to a report by Pensions & Investments. The $653.8bn pension fund has held discussions with Goldman Sachs and Dockside Platforms about gaining hedge fund exposure through SMAs, according to correspondence obtained through a public records request.
Emails exchanged earlier this year indicate CalPERS has been evaluating the SMA structure as a means of accessing diversifying investment strategies. In May, Goldman Sachs highlighted the uncorrelated performance of hedge fund managers as a potential rationale for renewed allocations. Dockside Platforms contacted the pension fund in February regarding its exploration of the SMA market.
June Kim, CalPERS' deputy chief investment officer for capital markets, is reportedly leading the review. No decision has been made on whether the pension fund will resume hedge fund investing.
CalPERS exited the industry in 2014, liquidating investments across 24 hedge funds and six funds of hedge funds as part of a broader effort to reduce portfolio complexity and investment costs. That decision became one of the most prominent institutional withdrawals from the sector. The potential reversal comes amid renewed institutional interest in hedge funds, supported by stronger recent performance and growing demand for portfolio diversification and downside protection.
The pension fund has also changed its investment approach since the exit. Stephen Gilmore became chief investment officer in 2024, and CalPERS adopted a total portfolio approach in July 2026, integrating investment management and risk allocation across asset classes. A CalPERS spokesperson said the fund regularly evaluates investment opportunities to strengthen portfolio diversification and resilience while meeting its target return. Any renewed allocation would mark a significant shift for one of the world's largest public pension funds.
Emails exchanged earlier this year indicate CalPERS has been evaluating the SMA structure as a means of accessing diversifying investment strategies. In May, Goldman Sachs highlighted the uncorrelated performance of hedge fund managers as a potential rationale for renewed allocations. Dockside Platforms contacted the pension fund in February regarding its exploration of the SMA market.
June Kim, CalPERS' deputy chief investment officer for capital markets, is reportedly leading the review. No decision has been made on whether the pension fund will resume hedge fund investing.
CalPERS exited the industry in 2014, liquidating investments across 24 hedge funds and six funds of hedge funds as part of a broader effort to reduce portfolio complexity and investment costs. That decision became one of the most prominent institutional withdrawals from the sector. The potential reversal comes amid renewed institutional interest in hedge funds, supported by stronger recent performance and growing demand for portfolio diversification and downside protection.
The pension fund has also changed its investment approach since the exit. Stephen Gilmore became chief investment officer in 2024, and CalPERS adopted a total portfolio approach in July 2026, integrating investment management and risk allocation across asset classes. A CalPERS spokesperson said the fund regularly evaluates investment opportunities to strengthen portfolio diversification and resilience while meeting its target return. Any renewed allocation would mark a significant shift for one of the world's largest public pension funds.
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