CalPERS Shifts Asset Allocations

August 16, 2011 (PLANSPONSOR.com) - The California Public Employees Retirement System’s (CalPERS) investment committee voted to lower the $226.1 billion fund’s goal for real estate as a proportion of assets to 8% from 10%.

Stocks were raised one percentage point to 50%, and bonds by three percentage points to 19%, according to Bloomberg.   

Real-estate holdings were valued at $18.5 billion as of Aug. 12, with equities at $112 billion and fixed-income assets at $41.3 billion, according to data on CalPERS’ Web site, Bloomberg said. Stocks and private-equity gains led to a 20.7% return in the 12 months ended June 30, the best result in 14 years.   

Real estate accounted for 7.8% of the CalPERS portfolio as of June 30, according to a staff report to the investment committee. The system lagged behind its target because real-estate holdings suffered “significant writedowns” during the housing bubble, the report noted.   

CalPERS was about $5 billion short of meeting its 10% goal. This would require the fund to purchase properties whose prices have become too high to provide adequate returns, according to the staff report.   

The investment committee voted to also reduce the target for infrastructure and forestland to 2% of assets from 3%, and for inflation-linked assets to 3% from 4%. The policy is retroactive to July 1.

«