The California Public Employees’ Retirement System said Chief Investment Officer Nicole Musicco will step down less than two years after she joined the largest US pension fund, sparking another round of turmoil in the high-profile public investing office.
(Bloomberg) — The California Public Employees’ Retirement System said Chief Investment Officer Nicole Musicco will step down less than two years after she joined the largest US pension fund, sparking another round of turmoil in the high-profile public investing office.
Musicco, 49, will leave her position at Calpers Sept. 29 to focus on her family in Canada, according to a statement on Friday from Calpers. She oversaw about 400 employees and managed an investment portfolio of about $500 billion.
She joined Calpers early last year after a long search to replace Ben Meng, who abruptly departed in August 2020. Meng, who held the position for about 18 months, resigned amid allegations that he ran afoul of rules governing disclosure of personal investments, triggering an investigation by a state regulator.
Musicco held the job for less time than it was vacant after Meng’s departure. Her replacement will become the pension’s third CIO in the past five years and fifth in the past decade, a turbulent period that included Joseph Dear’s death from prostate cancer, Musicco and Theodore Eliopoulos’s resignations citing family reasons, and Meng’s messy exit.
Late last year, Calpers recently lost another high-profile executive, Greg Ruiz, who served as global head of private equity at the pension and left to join Jasper Ridge Partners.
Musicco led the charge on a commitment by the pension to invest $1 billion in emerging and diverse managers in private markets. Previously, she was a partner at RedBird Capital Partners, where she led the firm’s Canadian investment business.
Deputy Chief Investment Officer Dan Bienvenue, who has been with Calpers since 2004, will serve as interim chief, according to the release.
Musicco, a Canada native, was born in Toronto and grew up in Southwestern Ontario. She worked briefly on Wall Street before obtaining an MBA and beginning a 16-year stint at the Ontario Teachers’ Pension Plan, where she ultimately led the fund’s private equity and public equity investment teams.
“I think I was employee number ten in the private equity group,” Musicco said in an August interview. “I was hired onto the direct investing team, and right out of the gate, we set out to really create a direct investing program.” The Ontario fund’s strategy was innovative at the time, and paved the way for what is now known as the Canadian pension model.
Musicco has been under pressure to meet Calpers’ annual return target of 6.8%. If the pension fund falls short, municipalities across the state could be forced to increase payments and cut city services to meet the pension obligations of more than two million Californians.
The fund reported a preliminary return of 5.8% for the fiscal year ended June 30, below the fund’s 10-year average of 7.1% and slightly below the California State Teachers Retirement System, which returned 6.3%.
Calpers had a funded status of 72% during the most recent fiscal year ended June 2023, which is slightly below the funding level of other US public pensions tracked by Milliman, for example. When Musicco was hired by Calpers, the pension said in a statement at the time that it was using investments in private markets to close the gap.
–With assistance from Pierre Paulden.
(Updates with returns in penultimate paragraph and additional context throughout.)
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