May 21, 2022

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US pension group Calpers appoints Kennedy as chief investment officer

US pension group Calpers appoints Kennedy as chief investment officer

Calpers, the largest public pension plan in the United States, has appointed a Canadian fund manager as its new chief investment officer about 18 months after the sudden departure of the former chief information officer.

The $478 billion California Public Employees Retirement System said Nicole Musico, a specialist in private markets, will take the high-level position. Musicco will succeed Dan Bienvenue, who took over as interim CIO in August 2020 after Ben-Ming resigned from the position.

Musicco’s appointment comes as Calpers, which has 2 million members, is embarking on plans to increase exposure to private markets on the back of bleak expected returns from listed stocks. Canadian pension funds have been among the world’s most proactive in spreading more of their capital overseas, in search of returns.

As part of a new four-year plan, approved before Musicco’s appointment, Calpers will raise its allocation to private equity by 5 percentage points to 13 percent and turn to private debt with a 5 percent allocation. At the same time, global equity exposure will be reduced from 50 per cent to 42 per cent.

Musicco told the Financial Times that there is a “significant opportunity” for Calpers to “surge” direct investment over time, meaning that the fund’s internal investment managers will play a greater role in choosing which private assets it will allocate money for. Pension funds typically invest in private equity, or with other private market managers, who can charge a large fee for their services.

She is the second woman to lead Calpers’ investment operations. “Nicole’s experience, vision and skills as an investor in the public and private markets are critical to Calpers,” said Marcy Frost, CEO.

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Musicco is a partner in RedBird Capital, a New York-based investment firm focused on building high-growth companies. She has also held leadership positions in the Ontario Teachers’ Pension Scheme, a C$200 billion (US$157 billion) Canadian pension fund. In 2018, she was appointed to lead the private markets investment program at the Investment Management Corporation of Ontario, a pension asset manager with more than C$70 billion in assets under management.

Chosen from a pool of international and local candidates, Musicco will have a team of more than 300 investment employees when it launches in late March. Calpers had previously said the epidemic had slowed her search for a replacement for Meng.

meng step down After the website Naked Capitalism published allegations that it had failed to fully comply with the California Commission on Fair Political Practices regarding the financial disclosure documents. At the time, Meng told the Financial Times that he properly disclosed all of his financial holdings.