Ted Eliopoulos, a real estate investment specialist who has overseen the CalPERS investment portfolio for much of the past year and a half, was named chief investment officer for the pension fund Wednesday.
The appointment puts Eliopoulos, 50, in charge of a $299 billion investment portfolio and 400 employees. The California Public Employees’ Retirement System is the nation’s largest public pension fund and wields significant influence on Wall Street and throughout the global investment community.
As an example, it made waves earlier this week when it announced it would eliminate its entire $4 billion worth of hedge-fund holdings after deciding those investments no longer made sense for the pension fund.
CalPERS spokesman Brad Pacheco said Eliopoulos was chosen over several external candidates.
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Eliopoulos has supervised the CalPERS portfolio as interim chief investment officer since his predecessor, Joseph Dear, was diagnosed with cancer last year. Dear died in late February.
For the past few months, mindful of the huge losses it suffered in 2008 and 2009, CalPERS has been examining ways to reduce investment risks. This week’s decision to exit the hedge fund business, which was expensive to maintain and produced relatively meager returns, was an outgrowth of that study.
Eliopoulos said the study will continue. “It’s a focus on performance and risk and cost,” he said in an interview Wednesday evening. Becoming more aware of risk is “one of the lessons we learned through the financial crisis,” he said.
A lawyer and former private developer associated with Sacramento area land baron Angelo K. Tsakopoulos, Eliopoulos served as deputy to former State Treasurer Phil Angelides from 2002 to 2006 before joining CalPERS in early 2007.
As senior investment officer for real estate, he came to CalPERS just as the housing bubble was about to burst. Before long, CalPERS’ real estate assets lost billions of dollars in value, along with much of the rest of the pension fund’s investment portfolio.
Over the next few years, the real estate portfolio was overhauled. Several outside management firms were fired. High-risk investments, such as raw land, were de-emphasized in favor of safer deals such as fully leased office buildings and shopping centers.
But Eliopoulos also made the decision to stick with some of CalPERS’ most difficult investments, such as Mountain House, a massive housing development near Tracy. Mountain House has cost the pension fund hundreds of millions of dollars but lately has started to bounce back. “In the long picture of things, we think CalPERS will be rewarded,” he said during ceremonies dedicating the community’s new high school in July.
In recent years, the $21 billion real estate portfolio has been generating healthy returns for CalPERS, including a 13.4 percent gain in the most recent fiscal year. The overall CalPERS portfolio has more than recovered from its losses.
“We’re in a much better place than we were,” Eliopoulos said.
Because of growth in pension obligations, CalPERS remains only 76 percent funded; that means it doesn’t have enough to cover its long-term obligations.
Rob Feckner, president of the CalPERS board, said Eliopoulos “distinguished himself during the selection process as the best candidate for this position.”
Added Henry Jones, chairman of the investment committee: “The CalPERS investment office has gone through a period of tremendous change and transformation in recent years. In addition to his remarkable talent, Ted will provide steady leadership and bring further stability to the office.”
Eliopoulos’ appointment comes with one structural change. Unlike Dear, who reported directly to the CalPERS board, Eliopoulos will report to CalPERS Chief Executive Anne Stausboll. A spokesman said the move is designed “to improve the ability to effectively govern CalPERS.”
Eliopoulos received a bachelor’s degree from Dartmouth College in New Hampshire and a law degree from the University of Virginia.
He lives in Sacramento with his wife and two daughters.