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Karstorz, one of the nation’s largest pension plans, is searching for a new chief investment officer after longtime executive director Christopher Eilman announced he would step down after 20 years.
Eilman, who has served as CIO of the California Teachers Retirement System since 2000, announced his retirement at Thursday’s board investment committee meeting.
Calstars, which manages pensions for more than 1 million California educators, will begin a global search to replace Alman, who will remain in the position until the end of June.
“It has been an honor to lead and guide this large global mutual fund for California teachers,” Eilman said.
Harry Keighley, retired Karstorz chairman of the board, said the fund had weathered a difficult 20 years of financial market downturns and bull markets under Mr. Allman’s leadership.
“He is a global leader and is considered one of the top CIOs in the world.”
Calstrs will advertise for a new chief investment officer in February, with the new person expected to be in the position by July.
Richard Ennis, founder of Ennis Knapp & Associates, a consultancy that works with institutional investors, and who advised Karstos, believes Eilman’s actions will be difficult to follow.
“Chris has masterfully managed the balance between sound investment principles and the overall politics of this work,” Ennis said, adding, “There are few others in this field who excel in this respect. No,” he added.
Ennis said Jason Malinowski, CIO of the Seattle City Employees Retirement System, is a strong candidate to replace Ehrman.
Mr. Eilman announced his retirement plans to the board at the same time that his investment team proposed adopting riskier strategies, including a 10% leverage limit on the total fund.
The proposal adopted by the board could allow Calstrs to borrow up to $30 billion to maintain liquidity without having to sell assets at fire sale prices.
In recent years, Calstrs has moved deeper into private markets such as private equity and commercial real estate, where assets are not easily transacted.
“While we are not looking to borrow money right away, this is an investment tool to use, especially during times of market turmoil,” Scott Chan, deputy chief investment officer, told the board.
“We have 42 to 43 percent.” [of the portfolio] in private markets and alternative assets.Requires flexibility to rebalance, especially when it comes to cash flow issues [we face]”
Calstrs portfolio manager Josh Deedesch, speaking to the board, said leverage can magnify a fund’s gains and losses. But he said Karstorz’s leverage proposal was “low risk”.
Allman’s departure means the two largest U.S. pension plans are looking for new investment heads.
Calpers, the $452 billion U.S. largest retirement system, is in the process of appointing a replacement for former chief executive Nicole Musico, who resigned last September for family reasons.
“Calpers is seeking a strong investor with extensive experience who is committed to our public service mission of securing retirement benefits for 2 million people,” CalPERS CEO Marcy Frost said in October. ” he said.
The CalPERS Board of Directors is expected to provide an update on the chief investment officer position, including interviews, at next week’s meeting.
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