California Public Employees’ Retirement System has named an official with China’s foreign exchange regulator as its chief investment officer.
Ben Meng returns to the US’s largest public pension, which he left in 2015. He worked there for seven years, latterly as investment director and head of asset allocation. Meng served as deputy CIO at the State Administration of Foreign Exchange – China’s foreign exchange regulatory agency in Beijing – in the interim.
The 48-year old will replace Ted Eliopoulos who announced his departure in May to relocate to New York by the end of the year for family reasons.
It’s unclear how Meng will approach private equity within CalPERS’s portfolio, but along with his investment expertise he brings an understanding of China “especially in a complex and politically charged time”, industry sources told Private Equity International.
US pensions have been increasing their capital commitments in Asia with China’s demographic and scale as the largest attraction to the region, as PEI reported earlier this month.
Meng was born and educated in China and is a naturalised US citizen. He holds a master’s degree in financial engineering from the Haas School of Business at the University of California, Berkeley, and a doctorate in civil engineering from the University of California, Davis. He is also an academic, having taught at the Haas School and the Shanghai Advanced Institute of Finance, according to a Tsinghua University profile of Meng.
Meng is on course to inherit a private equity programme that is in the process of being overhauled as well as a new arms-length direct investment unit called CalPERS Direct. He will also step into the position at the tail-end of Eliopoulos’s Vision 2020 strategy, which was implemented to reduce the portfolio’s complexity, cut fees and better manage risk.
Before CalPERS, Meng was a senior portfolio manager at Barclays Global Investors in San Francisco. He worked as a risk officer at Lehman Brothers and a bond trader at Morgan Stanley in New York earlier in his career.
Meng will oversee a portfolio of assets totalling $360 billion, lead an investment office of nearly 400 employees, and manage investment policies, risk management, corporate governance and ESG strategies, according to a statement.
His appointment comes at a crucial time in the world of US public pensions, where pension reform and the unfunded liability crisis have been key issues in the last few years. CalPERS has around 71 percent of the assets it would need to pay all of projected benefits it owes to public employees and retirees, the pension said in April.
“CIOs are now caught in the crossfire,” Alex Thompson, partner and head of US asset management at executive search firm Odgers Berndtson, told PEI. “They’re getting pressure from the legislature to create outsized returns to make up for the shortfall, which changes the risk profile of these pensions.”
While CalPERS only took four months to pick Eliopoulos’s successor, several US institutional investors are dealing with a challenging period hiring CIOs. The New York State Common Fund, Arizona Public Safety Personnel Retirement System and Alaska Permanent Fund Corporation (although not strictly a pension) are operating with temporary executives.
A source familiar with Meng noted he “knows what he is getting himself into at CalPERS” and that “he is comfortable in both the government and private sector”.