Industry Updates

CalPERS sees strong investment gains in 2009

Friday, January 22, 2010

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Opalesque Industry Updates – The California Public Employees’ Retirement System (CalPERS) said today that it earned an 11.80 percent return on investments for the 2009 calendar year.

Since March 2009, when global financial markets plunged amid a historic worldwide economic recession, the CalPERS market value of assets has come back by more than $46 billion. Total fund assets closed 2009 at $203.3 billion. Today they stand at more than $206 billion, up more than $3 billion in just the first three weeks of the new year.

“Last year was a wild ride for all investors, but we finished very strong,” said Joe Dear, CalPERS Chief Investment Officer. “We sharpened our investment focus, looking at our portfolio from top to bottom. Now we’re in a strong position to take full advantage of any financial upturn in 2010.”

CalPERS 20-year investment return remains steady at 7.75 percent – the assumed rate of return necessary to pay future member pension benefits.

The pension fund’s Global Equity portfolio was the biggest gainer among asset classes in 2009, with a 35 percent overall return. Driving the increase: A more than 43 percent gain from investments in international stocks, including emerging markets. Returns on investments in domestic equities increased nearly 28 percent.

Other CalPERS asset classes also saw strong returns last year:
* Global Fixed Income, up 14 percent.
* Inflation Linked Asset Class, which includes infrastructure, commodities, inflation-linked bonds and forestland, up almost 5 percent. Returns on infrastructure are as of September 31, 2009.

Two asset classes – real estate and private equity – suffered losses through the first nine months of 2009. Private equity was down 6 percent. Real estate fell 47 percent. The reported returns for each lag the year-ending results by one quarter.

“We took some very tough medicine in real estate last year,” said Dear. “But our team is making sure we apply the lessons we learned. We’re aggressively examining our portfolio and getting rid of the investments that don’t meet our expectations. We believe there will be some real opportunities to invest in income-generating properties at good discounts. I’m very excited about our potential and the moves we can make,” he added.

CalPERS also is realigning its relationships with its private equity partners, cutting fees and evaluating managers it will continue to do business with.

For information on CalPERS history of investments, go to Facts at a Glance-Investments in the press room at www.calpers.ca.gov.

CalPERS is the nation’s largest public pension fund with about $206 billion in market assets. The pension fund provides retirement benefits to more than 1.6 million state, public school, and local public agency employees, retirees, and their families, and health benefits to nearly 1.3 million members. Full press release: Source

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