Calpers returns 2.4 pct in past year, slightly underperforms

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calpers
Calpers headquarters is seen in Sacramento, California, October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker (UNITED STATES) - RTXPWO1

But the $301 billion fund, known as Calpers, earned returns of 10.9 and 10.7 percent respectively in the past three and five years, marking the first time since 2007 it outperformed benchmarks for those periods.

Those results far exceeded the pension fund’s assumed investment return of 7.5 percent.

Returns were driven by real estate and infrastructure investments, both returning over 13 percent over the past year.

The results were announced by Calpers Chief Investment Officer Ted Eliopoulos at a meeting of the fund’s board in Walnut Creek, California.

“Despite the impact of slow global economic growth and increased short-term market volatility on our fiscal year return, the strength of our long-term numbers gives us confidence that our strategic plan is working,” said Eliopoulos.

The total fund’s 12-month return on assets of 2.4 percent underperformed the benchmark by 9 basis points. The three- and five-year returns exceeded policy benchmarks by 59 and 34 basis points, respectively. A basis point is one one-hundredth of a percentage point

Calpers’ yearly rates of return, once audited, will help determine contribution levels for state agency employers and for contracting cities, counties and special districts in fiscal year 2015-16.

The global equity portfolio, the large allocation that makes up approximately 54 percent of the fund, returned one percent against its benchmark returns of 1.3 percent for the 12 months ended June 30.

Fixed income, the second largest asset class with approximately 18 percent of the fund, returned 1.3 percent for the period, outperforming its benchmark returns by 93 basis points.

Private equity meanwhile earned 8.9 percent but underperforming its benchmark by 221 basis points. Private equity makes up approximately nine percent of the fund.

(Reporting by Rory Carroll and Robin Respaut)