The $175 billion California Public Employees Retirement System, is considering a dedicated allocation to domestic junk bonds, and could begin searching for as many as five high-yield bond managers to handle an initial $1 billion. According to market sources, this is the first time in nearly a decade that the West Coast behemoth is entering the junk market. Curtis Ishii, investment officer for global fixed-income, says the fund's investment officials have drawn up a recommendation to begin searching for junk bond managers, and sent it to the plan's board for approval at its meeting today.
Kevin Winter, senior principal investment officer at the Sacramento plan--the largest pension plan in the country--says that investment officials want to get back into the junk bond market in order to further diversify the plan's assets. Plan officials believe junk bonds, a performance laggard through 2000, will bounce back to 1998-9 levels within the year.