The investment policies of state and local government pension systems have shifted markedly in recent years toward alternative investment classes, such as private equity, real estate and venture capital. For example, as of January 2016, the California Public Employees’ Retirement System (or CalPERS) had almost 20% of its $276 billion portfolio invested in these asset classes, compared with just 13% in 2001.
This shift raises the stakes in understanding how governance structures can impact the creation and preservation of value for pension systems, their sponsoring governments and the employee beneficiaries.
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