The largest public pension fund in the U.S. is feeling pressure over its private equity investments, and criticism over fee transparency has gotten under the skin of the giant fund’s CIO.

Although the California Public Employees’ Retirement System (CalPERS) has attracted criticism before over fees and risk, the negative attention comes at a time the fund is preparing to review its private equity strategy. The discussion at the fund’s June meeting fueled speculation that CalPERS could pull back from private equity, which currently accounts for $25.9bn of the fund’s $323.8bn portfolio.

Tensions were obvious from the start of the meeting, which took place on June 19. CIO Ted Eliopoulos opened with an unusual defense of a staff that he said had been “denigrated and attacked” over its investments in private equity. Eliopoulos suggested that CalPERS might be near a “tipping point,” where negative attention is “making it increasingly difficult for CalPERS to compete successfully in the private equity marketplace.” At the end of his opening statement, most board members offered applause in support of the private equity staff in attendance at the meeting.

“What happened was, Ted came out and had a pity party,” CalPERS board member J.J. Jelincic told MMR.

CalPERS’ private equity investments first became a particular target for criticism in 2015, when its investment staff reported that CalPERS didn’t have the ability to track carried interest payments that the fund made to private equity firms. Even with that history, the June meeting marked a notable shift in tone, and the CIO’s comments pushed other board members to publicly declare their support for private equity.

Read the full story: CalPERS feeling the heat on PE investments

Published by Money Management Report/Pageant Media.