In the wake of last week's market swoon, the manager of the largest pension fund in the United States believes global liquidity could start to decrease in earnest, which would actually be a good thing for long-term minded investors.
Russell Read, chief investment officer for the California Public Employees Retirement System, said the markets' recent correction was "pretty minor" when viewed in the context of strong gains over the last two years and could potentially represent a "buying opportunity."
"We look at it as a technical correction," the money manager said. "It was relatively small in scope and not a big source of concern for us."
"The world's capital markets have been so flush with capital it has actually soaked up a lot of the investment opportunities," said Read. "If liquidity dries up somewhat it's actually better for long-term investments for us."
Calpers is the nation's largest retirement fund with about $248 billion in assets under management.
Read said the recent rise in short-term interest rates is one of many telltale signs for a potential decrease in global liquidity.
"There is a reasonable chance we could have a very healthy correction in the liquidity story," Read said. "The world has been so flush with capital and with liquidity it would be a healthy development if we saw some of that dry up."
Read said his fund is looking at investment opportunities in Asia, and infrastructure and energy plays.
"Those are the long-term sectors that will be important," he said.