CalPERS investment portfolio hit in recent stock sell-off

After posting its best annual performance in 14 years, the California Public Employees’ Retirement System is giving back a sizable portion of its gains in the drubbing that stocks have taken on Wall Street in the last few weeks.

Before Tuesday’s big market rebound, the market value of CalPERS’ investments had fallen $18 billion, a drop of 7.6% since June 30, leaving the country’s largest public pension fund with $220 billion in assets, the fund said.

“It’s bad, but it’s not 2008,” CalPERS Chief Investment Officer Joseph Dear said in an interview on CNBC. “We have a crisis induced by lack of confidence in the U.S. and European political systems, combined with gloomier and gloomier economic growth forecasts.”

Wall Street’s massive stock sell-off of last week and this week “is a tipping point,” Dear said, “but it’s not a time to panic and run with fear out of the market.”


CalPERS held fewer stocks in its portfolio at the end of its fiscal year, June 30, than its plans allowed, and now is “considering whether we can go back in” to make long-term investments, Dear said.

Though he said he doesn’t expect the U.S. economy to fall into a double-dip recession, Dear acknowledged that the outlook for short-term growth is not rosy.

Those comments contrasted with Dear’s enthusiasm about the 20.7% investment return that CalPERS earned last year.

“The portfolio is quite healthy with positive benchmark-beating gains for nearly all of our asset classes over the past year,” Dear said at the time.

Through the Great Recession, CalPERS’ portfolio value dropped from a record high of $260.4 billion in October 2007 to $160 billion in March of 2009. It has since risen to as much as $237.5 billion at the end of June.

CalPERS’ gains were roughly in line with other large institutional investors’, according to a report Tuesday by the Wilshire Trust Universe Comparison Service, which serves as a performance benchmark for similar investors.