Calpers’ Eliopoulos: Lower 7% Target Is `Reasonable' Move

The video discusses the challenges and strategies related to managing an investment portfolio for a pension fund like CalPERS. It covers the importance of setting a reasonable discount rate and assumed rate of return, considering the current low interest rate environment. The video also explores intermediate and long-term forecasts for investment returns, highlighting the challenges posed by underfunding and negative cash flows. Strategies to address these challenges include long-term investment planning and asset reallocation.

Why is setting the assumed rate of return considered a high-order decision for pension funds like CalPERS?

• It affects the long-term sustainability of the fund.

• It influences the stock market directly.

• It determines the immediate cash flow.

• It is required by law.

What is the assumed return rate suggested by CalPERS' adviser, Wilshire?

• 5.5%

• 6.2%

• 7%

• 8%

What return is expected from CalPERS' fixed income portfolio over the next 10 years?

• 4%

• 3.5%

• 5%

• 6%

What is the funding status of CalPERS after the discount rate is lowered?

• 70% funded

• 64% funded

• 50% funded

• 80% funded

What demographic change is affecting the cash flow of CalPERS?

• Decrease in global equity returns

• Increase in young investors

• Rise in interest rates

• Retirement of baby boomers