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Calpers Demands Better Terms From Hedge Funds

Calpers, California’s public pension fund, told over two-dozen hedge fund managers this month that they could lose Calpers’ business unless it gets better terms such as changes in fee structures.

The pension fund giant said it wants greater reign over its assets, saying it would explore opening managed accounts. Additionally, Calpers said it wants money managers to disclose every security held in a fund.

"We believe that investors and managers alike stand to benefit over the long term when interests are better aligned, asset controls are properly instituted, and transparency of risks and exposures is improved," said Joseph Dear, Calpers Chief Investment Officer, in a press release. "We look forward to working with hedge fund managers in the coming months to strengthen these concepts and make hedge funds an even more effective asset management tool in the Calpers portfolio."

The move by the California Public Employees’ Retirement System is a sign of the changing power dynamics between hedge funds and their clients. The new requests were outlined in a memo on March 11.

According to a report in the Wall Street Journal, the funds that work with Calpers include Tremblant Capital, Atticus Capital and Och-Ziff Capital Management. Calpers also had money with Farallon Capital Management through last year, but it has redeemed that investment.

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