Dear steps back at CalPERS

Theodore Eliopoulos, CalPERS’ senior investment officer for real assets, has taken on the acting CIO role as Joe Dear battles prostate cancer.

Joe Dear, chief investment officer of the US' biggest public pension system, the California Public Employees’ Retirement System (CalPERS), will step back temporarily from his role while receiving treatment for prostate cancer, according to a CalPERS spokesperson. 

Theodore Eliopoulos, CalPERS’ senior investment officer for real assets, will take over as acting CIO for day-to-day operations. “He’ll be serving double duty while Joe is receiving treatment,” the spokesperson said.

Joe Dear: catalyst for change at CalPERS

Eliopoulos assumed the acting CIO role within the past month, the spokesperson said. He has worked in his position since 2007, overseeing CalPERS’ $22 billion real assets portfolio. Eliopoulos directs the system’s real assets staff of more than 40, as well as more than 60 external advisors responsible for investing in and managing all CalPERS’ real assets investments, which include the $19 billion real estate portfolio and $3 billion in investments in forestland and infrastructure, according to Eliopoulos’ biography provided to Private Equity International.

Dear, meanwhile, continues to work both from the office and from home, the spokesperson said.

Several investor relations sources who attended PEI’s 2013 Investor Relations & Communications Forum in New York last week expressed sympathy and characterised Dear as one of the “nicer guys” in the industry. 

Big changes

Dear's tenure at CalPERS has been anything but dull. He joined CalPERS in 2009 from the Washington State Investment Board (WSIB), where he had worked as executive director since 2002 (under his watch, WSIB notably increased its private equity allocation to 25 percent). Prior to WSIB, Dear was government relations officer for Tacoma, Washington-based investment firm Frank Russell Company. 

He came to CalPERS in 2009 to replace Russell Read at a time when the system had suffered its steepest single year loss in its history; the system also that year became embroiled in a nation-wide public pension pay-to-play scandal.

Under his leadership, CalPERS restructured the way it managed private equity relationships, created a risk management office and a whistleblower hotline, instituted rigorous travel and gift guidlines for staffers and prohibited firms that serve as investment consultants from also managing money for the system. CalPERS, under his leadership, also managed to win millions of dollars in fee breaks from various managers, including Apollo Global Management. (Click here to read an in-depth interview with Dear following some of these changes).

Dear also has come into the cross-hairs of advocates for the emerging manager community, who felt that CalPERS was pursuing a policy of committing more money to fewer, larger managers, and ignoring the emerging manager community, for which the system had long served as an anchor investor. Dear has spent time defending CalPERS' record on emerging manager investing and has publicly affirmed the system's support for the strategy. 

Perhaps more than anything else, CalPERS, under Dear's leadership, has become the benchmark LP, exerting powerful leverage in negotiating terms and conditions and helping, through its influence, to shift the balance of power from the GP to the LP.

The changes he has helped bring about, and his views and advocacy, haven't necessarily made him friends among GPs, but Dear has readily admitted that his job “isn't to make managers happy … we're going through each strategy and asking if managers are helping us achieve our target or not, and making very tough decisions not to invest in new programmes from those managers, or in taking our money back and redeploying it elsewhere in the portfolio”, Dear said last year during a public hearing.