PE Return: CalPERS: 19.2%; CalSTRS: 32%
Assets: CalPERS: $208 billion; CalSTRS: 142.7 billion
Return on investment is up at one giant California pension fund, but it’s down at another.
The California Public Employees’ Retirement System earned 12.3% on its investments over the last year, down slightly from the 12.7% it earned during the previous year. CalPERS beat the 7.75% internal rate of return it needs to fulfill its pension payment commitments to members and bested its 10-year average rate of 9.2 percent.
Charles Valdes, chair of CalPERS investment committee, said private equity was a particularly high-performer, along with international stocks and real estate. Private equity and venture capital investments returned 19.2%, compared to 11.6% for hedge funds. In 2004, private equity investments had a 22.8% return.
Real estate investments continue to be big winners for CalPERS, returning 38.4%, up slightly from the 38% the asset class returned during the same period last year. But the public pension fund has actually decreased its allocations of its assets committed to real estate, dropping to from 6% to 5% last year.
CalPERS manages $208 billion in assets, up from the $190 billion it reported at this time last year.
CalSTRS Posts Gain
The California State Teachers’ Retirement System, meanwhile, posted 13.2% return on its investments for its fiscal year, up from the 11.1% it returned during its previous fiscal year.
The fund’s alternative investment portfolio returned 32% for the year, beating the 24.9% it posted last year.
Christopher Ailman, CalSTRS’ chief investment officer, called the returns a “grand slam.” The fund beat the general stock market, which returned 9.5% for the same period. Ailman said the performance was worth more than $3.1 billion to retired teachers. CalSTRS manages $142.7 billion in assets, up from $128.9 billion the previous year.