CalPERS stunner: CIO to depart in two weeks

During Musicco's brief tenure, CalPERS substantially boosted its investment in venture capital funds as part of a larger effort by the CIO to grow private market exposure.

In a shocking move, the California Public Employees’ Retirement System said today that chief investment officer Nicole Musicco will step down at the end of this month after just 19 months on the job.

Deputy CIO Dan Bienvenue, who joined CalPERS in 2004, will serve as interim chief investment officer while the $463 billion pension system launches what it described as a “global search” for a replacement.

California Public Employees' Retirement System
Nicole Musicco, CalPERS

When Musicco, a former private equity executive, was hired by CalPERS in spring 2022, it was widely seen as a move to go “all-in” on private markets, as we reported at the time. During Musicco’s brief tenure, the system substantially boosted its investment in venture capital funds as part of a larger effort by the CIO to grow private market exposure.

“Musicco said the decision to leave CalPERS will allow her to attend to the immediate needs of family in her native home of Toronto, Canada,” CalPERS said in an announcement. It noted that since she took on the CIO job, “she has been shuttling between Toronto and Sacramento in recent weeks to help members of her large, multigenerational family.”

Musicco, who is set to officially step down on September 29, said in the statement: “Leading the CalPERS investment office has been an honor, and I am proud of the work my team has done to fulfill the retirement promises made to the 2 million Californians who have spent their lives in public service. However, at this time I need to prioritize those who need me the most, my family and children.”

Musicco had been critical of the strategy CalPERS pursued before her arrival, which was light on private equity. She described the years between 2009 and 2018 as a “lost decade” where the system averaged $2.7 billion in annual commitments to private equity – a low amount that she said cost the system between an estimated $11 billion and $18 billion in returns.

The CIO was supportive of a strategy, which PE head Anton Orlich outlined at the system’s June 20 investment committee meeting, to grow the venture portion of CalPERS’ $55 billion private equity portfolio from 1.4 percent at present to about 10 percent over about five years.

She said at the meeting that CalPERS and other “well-capitalized investors may really benefit from this dislocation that we’re seeing in the market,” as some LPs have pulled back due to the denominator effect.

“It’s been encouraging to hear that despite us having not participated in some of the private markets over the last decade… we have a real opportunity to work alongside a number of our partners who are seeing the dislocation and think of us now as being a first call,” she noted. “We’ve demonstrated that we can be agile and that we have the resources and decision-making platforms in place to be the first calls for these partners.”