CalPERS fails to clear returns benchmark

The $233bn retirement system’s private equity portfolio was one of a handful of bright spots in its investment holdings, which generated only a 1% return over the year to 31 March.

The California Public Employees’ Retirement System’s private equity portfolio outperformed the system’s overall return on its investments by 4.37 percent. Unfortunately for the $233 retirement system, it wasn’t much of an achievement given the lacklustre performance of other segments. 

CalPERS’ private equity portfolio had generated a 5.37 percent gain as of 31 March, compared to the system’s 1 percent overall return on its investments through June.  Final private equity performance including the last quarter of the fiscal year will be available after asset valuations are completed.

The private equity portfolio beat its return benchmark by 0.34 percent, and was valued at $34 billion as of 31 March. 

However, the retirement system failed to clear its overall 1.7 percent benchmark. 

“The last twelve months were a challenging period for all investors as the ongoing European debt crisis and slowing global economic growth increased market volatility and reduced equity returns,” said Joe Dear, CalPERS Chief Investment Officer in a statement. “It’s a clear reminder that we must remain focused on performance, risk and internal controls in today’s financial environment.”

A CalPERS spokesperson could not be reached for further comment at press time. 

CalPERS’ sister pension fund, the California State Teachers’ Retirement System, also had a lacklustre fiscal year. While that system’s private equity portfolio delivered a 5.9 percent return, its overall performance was just 1.8 percent. 

Earlier this year, Dear told Private Equity International that CalPERS would continue to reduce its number of private equity managers, and may consider selling another portfolio of fund stakes on the secondaries market.