Barron's Interviews Calpers' Joe Dear

Barron's interviews Joe Dear, Chief Investment Officer of California Public Employees' Retirement System [Calpers], the nation's largest public-pension fund. Some excerpts:

• Despite 'encouraging' developments, market conditions remain 'extremely fragile.'
• "The outlook for earnings has got to get more realistic... We're not going to see a powerful rebound in equities prices." Dear expects "to see lower returns in equities over the long term," but still thinks "the markets are going to produce good returns that will enable us to make our assumed rate of return of 7.75%."
• In terms of TALF, "our general strategy is to be very opportunistic in fixed income - toxic stuff with government credit behind it."
• "[Venture capital] has been a disappointing asset class recently. It's probably one of the most difficult areas in which to succeed as an investor."
• Dear's asset allocation model: 20% fixed income, 2% cash, 14% private equity, 49% global equity, 10% real estate and 5% for inflation-linked assets like commodities.
• "We think one of the most powerful trends unaffected by the dislocation of 2008 are the demographics and economic growth of the emerging markets. To try to capture more growth, we have to look at expanding our allocations in emerging markets."

(The full interview is available here.)