He said the outlook for the next five years "is pretty subdued, a low-return environment. "Pension fund managers are long-horizon investors. We can ride out the ups and downs of the markets. But with low interest rates and a relatively small equity risk premium you have a hard time getting that 7.75...The job gets harder every day."
Calpers still has a "huge exposure in risky assets. We have $100 million in equity. We didn’t leave the market."
The fund also has a large private equity position and has increased its allocation in short-term Treasury bonds. What it no longer has is exposure to European banks, which Calpers, along with other investors, shed in August, Dear said. Calpers has a minimum exposure to European sovereign debt .
For that to increase "there’s got to be enough liquidity in the system for the banks and the sovereigns for us to have confidence that no matter how bad it gets, there’s not going to be a systematic breakdown and a contagion in the credit markets. And we’re not even close to that."
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Disclosure information was not available for Joe Dear or his pension fund.