This should be a welcome relief to participants in California’s public pension plan. Ben Meng the man who steered the pension plan out of tail hedge strategies that soared just before the market crash and decided to leverage up the plan’s portfolio to meet return objectives is leaving. Hopefully, his successor will take a more prudent approach to risk management.
The FT has more:
Calpers, the $400bn Californian employee pension fund, said late on Wednesday that Ben Meng would leave effective immediately. The fund said Dan Bienvenue, deputy chief investment officer, would serve as interim chief investment officer as it looked for a permanent successor.
Mr Meng took the chief investment officer role in January 2019 after serving as a deputy at China’s $3tn State Administration of Foreign Exchange, the agency that manages the country’s capital account. The China-born American had previously worked at Calpers as the fund’s investment director for asset allocation.
To meet an ambitious 7 per cent annual performance target, Mr Meng led a push into private equity and private debt. These assets can produce higher returns but realising these during times of market stress can be difficult.
“Leverage will increase the volatility of returns but Calpers’ long-term horizon should enable us to tolerate this,” Mr Meng said in an interview with the Financial Times last month.
Mr Meng had recently drawn criticism for a plan to increase the fund’s leverage to 20 per cent of its value using borrowings and financial instruments such as equity futures. One board member, Margaret Brown, voted against the plan, saying it reminded her of the fund’s mis-steps during the 2008 financial crisis.
Read more here.