California pensions show strong returns

California’s public workers’ and state teachers’ retirement systems revealed high preliminary private equity return rates for the fiscal year, though both institutions missed their benchmark targets for the asset class.

The California Public Employees’ Retirement System posted private equity returns of 13.6 percent and the California State Teachers’ Retirement System’s private equity returns were 13.9 percent, as of 31 March, according to statements from each pension system. Both systems released their preliminary fiscal 2012-2013 returns Monday.

CalPERS’ private equity programme missed its annual benchmark by about 2.4 percent, CalPERS disclosed in an earnings call Monday. However, private equity surpassed its benchmark in three-year performance, posting returns of 14.5 percent, compared to a 13.7 percent benchmark, CalPERS revealed in the call. 

CalSTRS, which is the largest teacher pension fund in the US, reported a private equity return rate that underperformed its annual benchmark by more than 4 percent. But in the statement, Harry Keiley, chair of California Teachers’ investment committee, called all of the system’s return rates “very encouraging”. CalSTRS’ overall investment return was 13.8 percent, which is exponentially higher than the 1.8 percent returned last fiscal year. 

CalPERS’ overall return on investments was 12.5 percent, outperforming its benchmark by 1.5 percentage points, according to the statement. At year-end CalPERS’ assets were more than $257.8 billion. The gain in returns was led by its global public equity and real estate investments.