PE at CalPERS, CalSTRS generated 20 pct return through March

  • Buyouts drove performance for both portfolios
  • CalPERS to concentrate its portfolio among fewer managers
  • CalSTRS to put more emphasis on small, mid-market managers

The California Public Employees’ Retirement System, which has amassed a $31 billion private equity portfolio, saw that portfolio return 20 percent in the nine months ending March 31. The California State Teachers’ Retirement System’s $21.2 billion private equity program had generated 19.6 percent over the same period.

Sub-allocations to buyout and credit-related strategies drove CalPERS’s private equity returns through most of the fiscal year, portfolio manager Réal Desrochers said during a media call, with credit-related strategies receiving boosts from the retirement system’s commitments to specialized accounts managed by The Blackstone Group and Cerberus Capital Management.

Performance figures for the buyouts and credit sub-allocations will not be released until next month, spokesman Joe DeAnda wrote to Buyouts in an email.

Buyouts have also had a strong influence on CalSTRS’s returns. Roughly 70 percent of its portfolio is dedicated to buyout strategies, according to a March 31 report. Accordingly, buyout funds contributed 9.36 percentage points to the portfolio’s 13.4 percent internal rate of return since inception as of that date. Expansion capital and distressed debt funds were the next largest contributors, accounting for a combined 2.82 percent.

CalSTRS could not be reached for comment at press time.

Last week, CalSTRS Director of Private Equity Margot Wirth told Buyouts that the $189.1 billion retirement system plans to diversify its portfolio by committing to what she calls “breakout groups” among small and mid-market fund managers.

CalPERS, meantime, has made moves to consolidate its diverse portfolio by committing larger amounts to fewer general partners. Last month, the $300 billion retirement system disclosed a $300 million commitment to Onex Partners IV.

Since the start of 2014, CalPERS’s private equity activity has included a 225 million euro ($305 million) commitment to Permira V, a $300 million re-up to Blackstone Tactical Opportunities Fund and a $200 million commitment to CDH Fund V.

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