CalPERS Dismisses Two Firms as Managers

CalPERS, the biggest U.S. pension fund, said Tuesday that it fired Merrill Lynch & Co. as an international fixed income manager and dismissed Credit Suisse Group from its role in hedging about $1.4 billion in assets against currency fluctuations.

Merrill, which managed $543 million in international fixed income for CalPERS, was dismissed because the pension fund thought staff changes at the firm hurt performance. Credit Suisse was let go over differences in investment strategy.

The California Public Employees’ Retirement System made the decisions in closed session in November but reported the information on its Web site Tuesday as an agenda item for its investment committee meeting this month.

CalPERS spokesman Brad Pacheco said the dismissals won’t affect the $133-billion fund’s brokerage relationship with either of the firms. Neither firm could be reached for comment.

Pacheco said that beyond citing changes in staff at Merrill Lynch he could not release further details of why the company was fired. But he added that the firm was welcome to reapply as a manager in the future.

Pacheco said Credit Suisse was dropped as a currency overlay manager mainly over “philosophical difference” but CalPERS staff added the firm’s returns had been less than expected.

In the agenda item, CalPERS staff also recommended that the pension fund renew the contracts of six international fixed income managers for a one-year period to oversee $6.22 billion in assets. The firms are Baring Asset Management, Julius Baer, Bridgewater Associates, Rogge Global Partners, Wellington Management Co. and Western Asset Management.