CalPERS’ Portfolio Up 12.3% in Fiscal Year
The California Public Employees’ Retirement System, the largest U.S. public pension, said Tuesday that it earned 12.3% in the fiscal year ended June 30 as the value of its real estate, foreign stock and venture capital investments soared.
The gain, which is before management fees, beat the fund’s target rate of return of 7.75%. The target rate is the annual return necessary to pay future member benefits to more than 1.4 million state and local government employees.
The Sacramento-based fund, with assets of $208 billion, has gained more than 10% during each of the last three fiscal years, helping it bounce back from losses it suffered during the stock market plunge of 2000-02.
CalPERS said its returns were led by a 38% jump in the value of its investments in commercial real estate and apartments, which beat the 20.2% return of a benchmark index the fund uses to compare real estate investments.
The fund’s foreign stock holdings gained 27.2% in the fiscal year, CalPERS said, although that lagged behind the 27.7% return of its foreign-stock benchmark.
The fund’s U.S. stock investments -- the bulk of its holdings -- were up 9.6% in value, edging the 9.5% return of the benchmark for those assets.
U.S. bond investments lost 1.2% for the year, compared with a 3% loss for that asset category’s benchmark, CalPERS said. Bonds were hurt as rising interest rates depressed the value of older fixed-rate bonds.
The fund’s “alternative investment” program, which invests in venture capital funds and private-equity funds, rose 19.2% in the period, compared with 18.6% for a benchmark for those strategies, CalPERS said.
The fund’s biggest laggard was its corporate-governance investment strategy, which invests in companies that CalPERS is pushing to improve their performance. The strategy gained 17%, compared with 20.3% for its benchmark.
As of June 30, 68% of the fund’s assets were in publicly held stocks, 22% were in bonds, 5% were in real estate and 5% were in alternative strategies.
