Copyright 2004, Bloomberg News

Calpers to disclose venture fees

(Bloomberg News 12/8/04) -- The California Public Employees' Retirement System, the largest US pension fund, agreed to disclose the fees it pays to venture capital and hedge fund managers as part of a legal settlement.

The California First Amendment Coalition had sued the Sacramento-based pension fund in September for the information. The group said taxpayers have a right to know the returns Calpers gets from private equity investments and whether its managers have political ties to Calpers board members.

Calpers said it will develop spreadsheets showing the annual profits received from, and expenses paid to, 300 private equity and hedge fund partnerships as part of the settlement. The $177 billion pension had declined to divulge information about venture capital investments for fear of being shut out of the top funds, and had argued that fee disclosures could hamper future investment opportunities and returns.

Venture capital firms charge more than managers of equity mutual funds. The industry's standard fee arrangement is 1 percent of the committed or invested amount plus 20 percent of any profit. The group that sued Calpers contends that higher fees don't always correspond with higher returns. California First Amendment also said failure to disclose fee information prevents funds from competing on price.

According to legal documents provided by Calpers, it paid $206 million in fees to venture capital and other alternative asset managers in the fiscal year ended June 2003, about half its total $413 million of asset management costs.

The pension fund said it would release data for 2004 and 2005 but hasn't yet set a schedule.