CalPERS Allocation Change Proposal Goes Through

October 15, 2002 ( - For the first time in more than two years, the nation's largest pension fund has approved a significant asset allocation shift of funds from fixed income to alternative investments such as private equity and real estate.

The California Public Employees’ Retirement System (CalPERS) investment committee approved a 2-percentage point fixed-income cut to 26% while adding a percentage point to private equity and one to real estate to 7% and 9% respectively, according to a Reuters news report. The CalPERS proposal was first reported on Monday.

CalPERS’ 39% weighting in US equities and 19% for international equities were both unchanged.

Approval of the new allocation proposal for the $135-billion fund came as investors search for better returns to make up for portfolio losses caused by the stubborn bear markets.

Earlier this year, CalPERS began funding its highly anticipated $1 billion hedge fund program to diversify its alternative investment holdings.