By Christine Giordano
He almost appears to be the James Bond of CIOs. After almost doubling the size of the New Zealand Superannuation Fund as chief investment officer for five years, strategizing at the Future Fund, navigating the bail out at AIG, and, according to some media reports, navigating the warlords of Tajikistan while at the International Monetary Fund, Stephen Gilmore was chosen by CalPERS to become the chief investment officer of the largest pension fund in the United States, heading a portfolio valued at $494.6 billion in July.
His next challenge will be to negotiate with the California state legislature and a 13-person board of member-elected and political appointees. He takes the seat as the fourth CIO in slightly more than five years, succeeding Nicole Musicco, Ben Meng and Ted Eliopoulos.
Industry insiders say the role will require a high amount of diplomacy, as each of the 13 members of the CalPERS board is a strong advocate for a unique set of needs. Some are appointed by the governor and six members are elected. One state CIO, who had been approached by recruiters multiple times to apply for the role, was known for his ability to be both arbitrator and investor. He told Markets Group that, had he applied for and won the role, he would have spent months meeting with and understanding each board member individually in order to find consensus.
Likewise, it has been reported that Gilmore will spend his first 100 days listening to the stakeholders and discerning the unique needs of the plan, while playing close attention to increasing the funded ratio which dipped to 72% from 81% in 2021.
"I'm grateful to CalPERS' leaders for the trust they've put in me to help shape the pension fund's next chapter," Gilmore said in a written statement. "There are high expectations, and rightly so, when it comes to fulfilling the promises made in serving those who serve California."
Gilmore has 40 years of experience in the industry and hails from New Zealand. Interestingly, he comes to CalPERS at a time when it is deploying its Sustainable Investments 2030 plan, which includes investing $100 billion in climate solutions over the next six years.
He’s been primed for it. According to New Zealand’s Chief Executive Officer (Acting) Paula Steed, Gilmore was chair of the responsible investment strategy refresh at his $43.5 billion fund in New Zealand, and, has “been key to our shift towards a sustainable investment approach.” His fund was the top performing sovereign wealth fund in the world, with annual investment returns of more than 12% a year over the past decade, according to a CalPERS press release about his appointment.
"Stephen has worked in very public roles during his career for organizations where transparency and resiliency are essential," said CalPERS Chief Executive Officer Marcie Frost. "He brings not only a wealth of investing knowledge to the job, but he also has the temperament to understand the needs of our members and public sector employers who depend on CalPERS to be a steady, long-term partner."
CalPERS has been looking for a new CIO since October 2023, with the aid of the executive search firm, Dore Partnership. The salary for the position was listed as $718,750, plus performance bonuses, for remaining within its established benchmarks. He will oversee a team of more than 300 investment professionals and two million pensioners. He succeeded through two rounds of interviews that were held in January and February.
Reflected Steed, “Stephen has made a significant contribution to the sophistication of the NZ Super Fund since he joined us in early 2019, a period during which the Fund has grown by more than $30 billion, nearly doubling in size. He has championed the role of new technology in enabling better investment decision-making, brought innovative and disciplined thinking to our investment processes ... These enduring changes have helped to position us well to manage the ongoing growth in the Fund.”
CalPERS President Theresa Taylor described Gilmore as having “unmatched knowledge of global investing and managing diverse and high-performing investment professionals."
He worked at the International Monetary Fund as an economist and a Resident Representative in Tajikistan, spent several years as an executive director at Morgan Stanley, and a strategist at AIG, then spent almost nine years at Australia’s Future Fund as chief Strategist, and five years at Guardians of New Zealand Superannuation Fund. He holds a Bachelor of Commerce and a Master of Commerce in Economics from the University of Canterbury.
