CalPERS Adjusts Asset Allocation

December 18, 2007 ( - The California Public Employees' Retirement System (CalPERS) Board of Administration has adopted a new investment asset allocation for its $250 billion portfolio to deliver optimum risk-adjusted investment returns over the next three years.

According to the announcement, CalPERS will continue to target 66% of its portfolio to public and private equities combined. Fixed income and inflation-linked assets combined will be 24%, and Real Estate assets will be 10% – a 2% increase over the previous allocation.

Specifically, global publicly-traded stocks, which were 60% of the total portfolio, will be adjusted to 56% and will be evenly split between U.S. stocks and international stocks, the announcement said. Private equity, which held 6% of assets, will increase to 10%.  Fixed Income’s target will decrease from 26% to 19%, and the new inflation linked assets will have a 5% allocation.

CalPERS said its investment officers will use the targets to deploy capital over the next two to three years, when the Board tentatively is scheduled to again review and revise the allocation mix, based on market trends. There is no timeline for deploying funds under the new allocations.

The revised mix of assets does not significantly change the expected return or volatility of returns compared with the current CalPERS asset allocation, the announcement said.