The California Public Employees’ Retirement System, the country’s biggest government pension fund, said Tuesday that it earned a 13.3% net return on investments for its fiscal year, a turnaround from a big loss a year earlier.
The results for the 12 months ended June 30 outpaced its targeted annual rate of return of 7.7%. A year earlier, it suffered a 23.4% loss during the worst recession since the Great Depression.
At the end of June, the CalPERS portfolio was worth $200.5 billion, substantially down from a record high of $260.4 billion on Oct. 31, 2007.
“This updated report indicates a gain of more than $40 billion since our turnaround from the lowest point of the recession in March 2009,” Chief Investment Officer Joseph Dear said.
“We also beat our benchmark of 12.95% and eclipsed return targets for every asset class except real estate,” he said. “But even that asset class improved dramatically over what we reported in July.”
CalPERS reported significant gains in a number of areas: global fixed equity, including bonds, rose 20.4%; private equity was up 23.9%; publicly traded stocks grew 14.4%; and commodities, infrastructure, forestland and inflation-linked bonds gained 8.7%.
Real estate investments fell 10.8% but did much better than an earlier estimate of a 37.1% drop.
“These financial figures are good news for employers since investment gains will help mitigate increases in their contribution rates,” Dear said.
CalPERS officials are concerned that future returns can’t be counted on regularly to exceed the 7.7% annual target rate. The pension fund’s board is considering cutting that assumed rate of return, which could translate into asking employers and employees to contribute more money to the fund.
CalPERS provides retirement benefits to 1.6 million active and retired state, local government and school employees and their families.