She told subordinates they needed to build a “best-in-class investment office” and was laying the groundwork to hire more staff.Īt the town hall, she described a meeting with National Football League Commissioner Roger Goodell. Musicco’s attempt to transform CalPERS into a bolder dealmaker meant an adjustment for the roughly 400 employees in her investment shop. In Canada, there’s less scrutiny and they can lure buyout professionals more easily. In the US, public pension plans usually operate under constrained budgets and salaries. Yet grafting her version of the Canadian model onto CalPERS proved challenging. Musicco spent more than 16 years at the Ontario Teachers’ Pension Plan and a year at the Investment Management Corporation of Ontario before joining RedBird Capital Partners, a private equity firm known for its investments in Italian football team AC Milan and the TV network of the New York Yankees. When the fund enlisted her, it hoped the seasoned private equity investor would boost returns by taking a page from Canadian pension plans that often bypass outside buyout giants and their fees by directly acquiring stakes in companies and seeking other alternative assets. Musicco was the second woman to lead CalPERS’ investment operations. The pension fund serves more than 2 million people, including police and firefighters. Its next CIO will not only face intense pressure to restore the institution’s credibility and clout, but the cold math of hitting a 6.8% return target.įalling short could potentially force municipalities across the state to make up the difference by increasing payments and digging into their budgets, potentially cutting city services. That means it ranked below 80% of its peers for the two fiscal years that wrapped up during her tenure.Īfter cycling through a series of leaders, strategy shifts and a retreat from private equity in the decade after the financial crisis, the pension system’s portfolio is only 72% funded. The pension posted a preliminary return of 5.8% for the year through June. “Large organizations thrive by embracing change.” “Musicco’s efforts have been embraced by a wide array of professionals on her team, and many have reached out to offer their support and compassion during this difficult time,” Myers said. Such fault-finding represents a small number of people lodging “water-cooler criticisms,” he said. “But the vast majority of this team embraced change from the start and our mission to create the kind of culture that CalPERS truly needs in order to be best-in-class and deliver its promise to its members.”ĬalPERS spokesperson John Myers said Musicco was hired with the full backing of the pension board and staff leadership. “There will always be a small minority that fights change,” she said. It didn’t help that she was frequently absent from the office as she commuted from her family’s home in Toronto, said people familiar with the matter.Īt the board meeting, Musicco defended her approach. Some were also irked by Musicco’s focus on sports, technology and venture capital investments, saying she hadn’t clearly outlined how CalPERS would pull off such deals, and specifically, how such a massive institution could successfully deploy money at scale and move the needle on returns. Musicco’s attempt to import the so-called Canadian investment model, which emphasizes direct investments to reduce the fees paid to outside managers, didn’t sit well with key investing staff at CalPERS, because there was no clear path communicated on how to do it, according to people close to the pension who were not authorized to speak publicly. CalPERS said she was leaving “to attend to the immediate needs of family” in Canada. On Friday, the 49-year-old resigned after just 18 months, the latest in a string of abrupt exits from the role in recent years. CalPERS also invited Tony Ressler, the billionaire Ares Management co-founder who owns the Atlanta Hawks, to speak to its board.īut Musicco’s plans for transforming the $463 billion pension fund - informed by her background at pioneering Canadian public pensions and an investment shop known for sports deals - would never come to pass. She wanted “stadium deals” and identified professional sports as a frontier for more investing.Īlso see: CalPERS CIO Musicco stepping down after less than 2 yearsĭuring her tenure the fund explored buying a stake in its hometown basketball team, the Sacramento Kings, said people familiar with the matter. She desired innovation, she told the audience at its Sacramento headquarters. In her first year atop the California Public Employees’ Retirement System as chief investment officer, Nicole Musicco gathered dozens of staff and laid out an ambitious vision for the largest US public pension fund. By Eliyahu Kamisher and Dawn Lim | Bloomberg
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