Calpers CIO Resigns After Less Than Two Years, Missing Return Targets

(Bloomberg) -- Ben Meng has resigned as chief investment officer of the California Public Employees Retirement System after less than two years in the role, during which time the biggest U.S. public pension fund fell short of its target returns.

Meng stepped down effective Aug. 5, Calpers said in an emailed statement in Asia hours Thursday. He cited a wish to focus on his health and family. Meng's deputy, Dan Bienvenue, will serve as interim CIO while a search is undertaken for a permanent replacement, said Calpers, which oversees about $390 billion.

Sacramento-based Calpers reported a return of 4.7% for the 2019-2020 fiscal year, short of the annual 7% gain needed to meet its long-term liabilities for a second year running. The increase was the lowest since the 12 months ended June 30, 2016, when the fund rose 0.6%.

Meng had only in June laid out a plan to boost exposure to private equity and credit, add leverage and cut costs by concentrating bets with fewer outside managers. Calpers earned about 6.7% on its investments in fiscal 2019, missing its goal for the first time in three years.

The fund's assets plunged by $70 billion in late February and March as the Covid-19 crisis hurt global markets. But it said it recovered almost all of that value by June as markets rebounded.

In the statement, Calpers said Meng had helped the fund beat its “benchmark of 4.3% during a time of extreme financial market volatility sparked by the coronavirus pandemic.”

“I deeply believe in the Calpers mission of serving those who serve California,” said Meng, who was appointed CIO in January 2019.

“I'm proud of the work we did to change the portfolio, build a skilled investment office, and set Calpers on a strong path to achieve our return target. But at this time, it's important for me to focus on my health and on my family and move on to the next chapter in my life.”

Earlier this year, Meng, a U.S. citizen who grew up in China, was accused by Republican Congressman Jim Banks of being a tool for the Chinese government, funneling American money into Chinese hands.

The allegations centered around a three-year stint Meng did from 2015 helping oversee China's $3 trillion in currency reserves. During that time, he was deputy CIO of the State Administration of Foreign Exchange, or SAFE.

Wall Street Support

Meng was hired for his job at the Chinese fund via a government recruitment plan known as the Thousand Talents Program. That, according to Banks, likely includes a lifelong mission to support Chinese authorities.

Meng rejected Banks's claims and said his connections with Thousand Talents ended when he left SAFE. He was supported by prominent Wall Street investors including Oaktree Capital Group LLC founder Howard Marks, and Stephen Schwarzman, chief executive officer of private equity firm Blackstone Group Inc.

Calpers manages pension money for about two million current and former California public servants. According to its own research, it needs to alter its approach or it's likely to come up shy of its target over the long haul.

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