Key Takeaways
- • CalPERS CIO Stephen Gilmore walked the board through the pension's role in setting risk parameters for a Total Portfolio Approach (TPA), according to Top1000funds.com.
- • Under TPA, each investment is judged by its contribution to the total fund's performance rather than its performance within a single asset class, per publisher materials.
- • The California pension approved a proposal to implement TPA by July 2026, reportedly making it the first institutional allocator in the U.S. to do so.
- • Board governance under TPA centers on a unified view of portfolio risk, with the board setting the system's risk level and management operating within an active risk limit.
- • CalPERS plans to consider linking more investment staff incentives to total fund performance at a June board meeting.
Summary
CalPERS CIO Stephen Gilmore took the board of the California Public Employees' Retirement System through its role in setting the risk parameters behind a Total Portfolio Approach (TPA), according to Top1000funds.com. The discussion sits within the board's Asset Liability Management agenda item, where current portfolio risk is estimated using a preliminary TPA risk model applied to fiscal year 2024-25 interim strategic asset allocation (SAA) targets.
Under TPA, the focus shifts from how each asset class performs in isolation to which investments can best contribute to the performance of the entire CalPERS portfolio. Publisher materials describe the governance model as one in which the board focuses on a unified view of portfolio risk and evaluates how all investments build up to meet total fund objectives. The board's role is to set the system's risk tolerance and management's active risk limit, with accountability for managing risk and fiduciary responsibility framed around that structure.
Publisher materials report that the board has approved the proposed change to implement TPA by July 2026, which would make CalPERS the first institutional allocator in the U.S. to adopt the approach. Separately, the fund is set to consider linking more of its investment staff incentives to total fund performance at a June board meeting, a change that would align compensation with the TPA framework.
The article is part of Top1000funds.com's coverage of institutional investing. Related coverage in the same feed includes discussion of CalPERS CEO views on the asset-liability management challenge, and a comparison of TPA versus traditional SAA drawn from a real-time case study. Full details of the risk model outputs and the board's specific risk limits were not available in the accessible text of the article.
Under TPA, the focus shifts from how each asset class performs in isolation to which investments can best contribute to the performance of the entire CalPERS portfolio. Publisher materials describe the governance model as one in which the board focuses on a unified view of portfolio risk and evaluates how all investments build up to meet total fund objectives. The board's role is to set the system's risk tolerance and management's active risk limit, with accountability for managing risk and fiduciary responsibility framed around that structure.
Publisher materials report that the board has approved the proposed change to implement TPA by July 2026, which would make CalPERS the first institutional allocator in the U.S. to adopt the approach. Separately, the fund is set to consider linking more of its investment staff incentives to total fund performance at a June board meeting, a change that would align compensation with the TPA framework.
The article is part of Top1000funds.com's coverage of institutional investing. Related coverage in the same feed includes discussion of CalPERS CEO views on the asset-liability management challenge, and a comparison of TPA versus traditional SAA drawn from a real-time case study. Full details of the risk model outputs and the board's specific risk limits were not available in the accessible text of the article.
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