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Alternative Market Briefing

CalPERS posts 18.4% return year-to-date

Tuesday, July 15, 2014

Bailey McCann, Opalesque New York:

The California Public Employees' Retirement System (CalPERS) reported a preliminary 18.4 percent return on investments for the 12 months that ended June 30, 2014. CalPERS assets at the end of the fiscal year stood at more than $300bn. Alternative strategies including absolute return products, private equity and real estate helped to bolster fund returns.

The gain marks the fourth double-digit return the pension fund has earned in the last five years. Investments in domestic and international stocks returned 24.8%, outperforming the CalPERS custom public equity benchmark by 0.5%. Investments in income-generating real assets like office, industrial, and retail assets returned 13.4% outperforming the Pension Fund's benchmark by 1.6% points.

CalPERS 18.4% return is well above the Fund's discount rate of 7.5%, the long-term return required to meet current and future obligations. CalPERS 20-year investment return is 8.5%, while its return since 1988 is 8.9%.

Private equity investments posted returns of 20.0%. Absolute return strategies posted returns of 7.1%, adding to the overall performance of the broader portfolio. CalPERS has been working through alterations to its allocations to alternative strategies. Allocations to the credit side of hedge fund strategies are likely to increase, while target allocations for private equity have gone down as the pension faces difficulty finding investment opportunities in that sec......................

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