CalPERS Ups Alternative Investments

May 17, 2000 ( - The $174 billion California Public Employees Retirement System (CalPERS), in the first asset allocation shift since September 1997, voted to increase its exposure to alternative investments.

Its board voted to shift some holdings out of US and international equities and into private equity and real estate. Fixed income holdings will maintain at current levels. 

The board followed a staff recommendation (reported here on May 12) that the fund:

  • cut US equities by 2 percentage points to 39% of assets
  • cut international stocks by 1 percentage point to 19%
  • increased private equity to 6% from 4%
  • and increased real estate to 8% from 6%.

CalPERS’ staff projects a return of 9.6% a year for U.S. equities over the next decade, compared to 13.5 % for private “alternative investments” like venture capital and buyout funds. They project real estate to return 8.5%.