CalPERS’ performance was the highest the pension fund’s board has seen since a 25.3% gain in 1995, the fund said in a news release. Total assets stood at $161.1 billion at the end of the calendar year – up by $30.4 billion more than one year earlier. “Slow and steady wins the race,” said Rob Feckner, Chair of CalPERS Investment Committee.
CalPERS 2003 performance bested the 8.25% average annual return it needed to meet projected retirement obligations to the system’s retirees. The return data is also used to project future rates for CalPERS largest employer, the State of California, and its more than 2,400 local public agency employers.
The sun shined brightly during 2003 for all of CalPERS asset classes. For example, CalPERS’ US stock investments returned more than 31% to eclipse the Wilshire 2500 benchmark of 30.7%. CalPERS international stock holdings earned 38.8% bonanza, while hedge fund investments returned a strong 16.7%.
CalPERS investments in funds that use corporate governance strategies to turn around ailing companies gained 39.3%, according to the announcement.
Fixed Income in Double Digits
CalPERS’ fixed income investments were also strong 2003 performers. International fixed income gained 19.8%, compared with its Salomon Brothers World Government Index benchmark of 18.5%, while US fixed income investments earned 9.5%, more than 4 percentage points over the benchmark.
CalPERS’ real estate investments, which are largely in office, retail, apartment and industrial assets, gained 8.5%. Its portfolio of housing, timber and other specialized real estate assets earned 20.4%. Both portfolios exceeded the NCREIF Property Index that returned 7.8%.
In terms of asset allocation, currently 68% of the CalPERS portfolio is invested in equities, 25% in bonds and other fixed income and 7% in real estate.
CalPERS, the nation’s largest public pension fund, provides retirement and health benefits to more than 1.4 million public employees and their families. For more information go www.calpers.ca.gov .