Strong equity and real asset performance contribute to solid returns
SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) today reported a preliminary 18.4 percent return on investments for the 12 months that ended June 30, 2014. CalPERS assets at the end of the fiscal year stood at more than $300 billion.
The gain marks the fourth double-digit return the Pension Fund has earned in the last five years. Returns were led by strong performances by CalPERS global public equity and real estate investments. Investments in domestic and international stocks returned 24.8 percent, outperforming the CalPERS custom public equity benchmark by 0.5 percent. Investments in income-generating real assets like office, industrial, and retail assets returned 13.4 percent, outperforming the Pension Fund’s benchmark by 1.6 percentage points.
“This is great investment performance that we should be proud of,” said Rob Feckner, President of the CalPERS Board. “I commend our staff for their continued hard work and commitment to our members, as well as our Board Members for supporting our professional staff during the difficult months following the global financial crisis and throughout the recession.”
CalPERS 18.4 percent return is well above the Fund’s discount rate of 7.5 percent, the long-term return required to meet current and future obligations. CalPERS 20-year investment return is 8.5 percent, while its return since 1988 is 8.9 percent.
CalPERS current funding level – the amount of assets CalPERS has to pay current and future benefits – is estimated to be 76 percent as of June 30, 2014, based on the recent earnings.
“We’re pleased with these results and we remain focused on continuing to take the necessary steps to ensure the long-term sustainability of the Fund,” said Henry Jones, Chair of CalPERS Investment Committee. “Our long-term investment focus will be a key factor in that effort.”
Today’s announcement includes asset class performance gains as follows:[table] Asset,Percent Return
Public Equity, 24.8%
Private Equity, 20.0%
Fixed Income, 8.3%
Real Assets, 13.4%
Inflation Assets, 8.3%
Absolute Return Strategies, 7.1%
Returns1 for real estate, private equity, and some components of the inflation assets reflect market values through March 31, 2014. Final performance, including the last quarter of the fiscal year, will be available after asset valuations are completed.
“These are solid numbers fueled in part by the significant rebound of the financial markets,” said Ted Eliopoulos, CalPERS Interim Chief Investment Officer. “Our focus remains to achieve the best risk-adjusted returns we can for our members.”
CalPERS 2013-14 Fiscal Year investment performance will be calculated based on audited figures and will be reflected in contribution levels for the State of California and school districts in Fiscal Year 2015-16, and for contracting cities, counties, and special districts in Fiscal Year 2016-17.
CalPERS is the largest public pension fund in the U.S. CalPERS administers health and retirement benefits on behalf of 3,064 public school, local agency, and state employers. There are more than 1.6 million members in the CalPERS retirement system and more than 1.3 million members in its health plans. For more information about CalPERS, visit www.calpers.ca.gov.
1Investment returns are based on compounded daily earnings over the year, including continuing member contributions and benefit payments, and do not precisely correspond to 1-year changes in CalPERS overall portfolio market value.