CalPERS Selects Private Money Manager as Investment Chief

The state’s giant worker pension fund said Thursday that it picked Daniel M. Szente, a private money manager, as its new chief investment officer.

Szente, 52, will oversee the portfolio of the $175-billion California Public Employees’ Retirement System, which provides retirement and health benefits to more than 1 million people.

Szente, now executive vice president and director of research for Pennsylvania-based McGlinn Capital Management, replaces Sheryl K. Pressler, who resigned in January to become chief of Atlanta-based Lend Lease Real Estate Inc.

The CalPERS job is one of the highest-profile public fund management jobs in the nation, because CalPERS is the largest such fund and thus wields enormous clout with its money.

Most of the fund’s assets are “indexed”--that is, the fund simply owns all the stocks in major market indexes and doesn’t attempt to time the market or pick the best stocks of the moment.

But CalPERS, like other pension funds, also invests a portion of its assets with private money managers, in real estate projects and in other “alternative” investments. Szente will oversee the indexed portfolio as well as the other investments and will implement decisions made by the fund’s board--including the recent decision to cut back on stock holdings in favor of other assets.

“It really comes down to CalPERS,” said Szente of his decision to leave a more lucrative job in the private sector to join the fund. “I perceive them as being the biggest and the best. I love my firm but it’s very narrow in focus. This represents a broader challenge.”

Szente will earn $260,000 a year as CalPERS’ investment chief, with the possibility of pay incentives.

CalPERS Chief Executive James Burton said the fund’s board was impressed with Szente’s blend of public-pension and private-industry experience.

A 21-year veteran of the investment industry, Szente previously served as director of investments for the State Teachers Retirement System of Ohio.

In 1995, he was appointed manager of the Howard Hughes Medical Institute’s equity portfolio--a position he left three years later to join McGlinn Capital, which manages assets of about $3.5 billion.