In this framework, there are applications of the risk parity approach to investing, Dear says. “Are we likely to lever the whole bond portfolio? I seriously doubt it,” he says. In more conventional terms CalPERS is moving to a higher emerging markets allocation, with allocations now mirroring the world market capitalisation, consistent with its move to a global equities allocation two or three years ago. “There’s the question of whether to overweight emerging markets because we anticipate better growth over the long term, and then we immediately ask the question of what’s the right entry point. That’s what we are looking at. We’re asking the question: do you overweight emerging markets?” he says.

In addition to spearheading the asset allocation review alongside senior investment officer Farouki Majeeed, Dear, who has only been at CalPERS for 15 months, is pursuing other initiatives to make his mark on the organisation. A drive towards transparency and the full participation of stakeholders have been enduring qualities of his career (a former colleague at the Washington State Investment Board, chief executive, Theresa Whitmarsh, references this in a recent article: “Building Value and Reputation with Stakeholder Management: The Case of Washington State Investment Board”) and that continues at the large Californian fund. “I accepted the appointment at CalPERS looking for a professional challenge, and I’m grateful I’ve found so much of it. It’s a great job, I have no complaints, I really enjoy it,” he says. “I want our beneficiaries to say I’m not worried about CalPERS, I’m confident. We’re working hard to keep that trust and grow it.”

Similar to many CIOs at US public pension funds, Dear is restricted by a “no-growth budget” but his focus on the efficiency gains made by bringing down the costs of investment management is allowing for the redeployment of staff. “I don’t feel limited at this stage,” he says. “We can demonstrate we’re managing costs as aggressively as we can; we’ve had some success there. Last month we told the board we had targeted $50 million of recurring savings in a plan to be done by early May, and we hit $100 million. We’ve taken out $120 million of costs, effectively 10 per cent of our entire spend, so I think that’s material,” he says. A large component of those savings have been in hedge funds, through renegotiation of fees and better terms on new funds, as part of the three pillars initiative which saw a restructuring of the portfolio in 2009.

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