Largest Pension Funds Announce Double-Digit Gains
The gain was led by strong performances by CalPERS global public equity and real estate investments. Investments in domestic and international stocks returned 19%, outperforming the CalPERS custom public equity benchmark by nearly 1 percentage point. Investments in income-generating real properties like office, industrial and retail assets returned 11.2%, outperforming the pension fund’s real estate benchmark by 1.4%.
“When things got rough, we didn’t panic,” said Joe Dear, CalPERS chief investment officer. “We stuck with our exposure to growth assets and applied the lessons we learned from the past. The numbers show us that our approach is working.” CalPERS is the nation’s largest public pension fund, with more than $257.8 billion in assets.
CalPERS’ 12.5% return is well above the fund’s discount rate of 7.5%, the long-term return required to meet current and future obligations. CalPERS’ 20-year investment return is 7.6%, while its return since 1988 is 8.5%.
Performance by asset class was as follows:
- Public equity—19%;
- Private equity—13.6%;
- Fixed income—1.6%;
- Real estate—11.2%;
- Liquidity—0.8%;
- Inflation assets—0.2%; and
- Absolute return strategies—7.4%.
Meanwhile, steady growth in the global equity market fueled a 13.8% fiscal year investment return at the California State Teachers' Retirement System (CalSTRS), the nation's second largest public pension fund. The fund's actuarial assumed rate of return is 7.5%.
By asset class, returns were as follows:
- Global equity—19.2%;
- Private equity—13.9%;
- Real estate—14.1%;
- Inflation sensitive—2.2%; and
- Fixed income—0.9%.
CalSTRS 20-year return is 7.5%. The fund has $165.8 billion in assets as of June 30.