Stephen Gilmore, currently chief investment officer at sovereign wealth fund New Zealand Super, is to become chief investment officer for the largest pension plan in the US, CalPERS.

The Californian Public Employees Retirement Scheme has around $US494 billion ($759 billion) under management. For many years, CalPERS was a leading allocator of funds to private equity and venture capital; it cut back its allocations about ten years ago but in the last two years has renewed interest in the sectors, which have remained among its best performers over the long term.

Gilmore joined NZ Super five years ago from the Future Fund where he was chief investment strategist for nine years. He had been seen as the most likely replacement for NZ Super chief executive Matt Whineray who announced his departure last May.

The Guardians of NZ Super recently surprised the investment community by announcing former chief executive of Funds SA, Jo Townsend, had been recruited as the fund’s new chief executive.

Speculation immediately arose that Gilmore, who had overseen impressive investment performance, had accepted a new post elsewhere.

Announcing Gilmore’s appointment, CalPERS chief executive Marcie Frost said that at NZ Super Gilmore had overseen the world’s best performing sovereign wealth fund with annual investment returns of more than 12% over the past decade.

“Stephen has worked in very public roles during his career for organisations where transparency and resilience are essential,” she said. He brings not only a wealth of investing knowledge to the job, but he also has the temperament to understand the needs of our members and public sector employees who depend on CalPERS to be a steady, long-term partner.”

CalPERS President Theresa Taylor said the pension scheme had conducted an exhaustive world-wide search for a new chief investment officer and was confident Gilmore was the right person to succeed Nicole Musicco who left CalPERS in September. Mussico was the second chief investment officer in a row to leave after only 18 months in the position.

Gilmore will oversee a team of more than 300 investment professionals, when he takes up his new position in July. The announcement of his appointment comes shortly after the launch of a sweeping Sustainability Investments 2030 plan which includes investing $US100 billion in climate solutions over the next six years.

The annual salary for the CalPERS chief investment officer role is $US718,750, not including incentives based on fund performance relative to established benchmarks.

In addition to his roles with the Australian and New Zealand sovereign wealth funds, Gilmore has held senior international positions with AIG Financial Products and Morgan Stanley and has fulfilled assignments with the International Monetary Fund and the Reserve Bank of New Zealand.

CalPERS announced on March 19 that its board of administration had approved a proposal to increase investments into private markets.

“CalPERS continues to progress with the private asset strategy begun in 2022,” the announcement said. “The proposal will increase total private markets allocations from 33% of plan assets to 40%. Private equity will increase from a target of 13% of the fund to 17% while private debt will increase from 5% to 8%. The private equity strategy has been successfully achieving its program goals for co-investment and investments in diverse managers while moving away from large buyout.”

CalPERS Trustee and chair of the scheme’s investment committee, David Miller said: “Strong and ongoing growth in private equity returns is behind this measured and appropriate increase. Market conditions are evolving, and the investment team needs latitude to deploy capital intelligently to keep the fund on track for sustainable returns.”

Image: CalPERS’ new chief investment officer Stephen Gilmore.