Private Equity Boosts CalPERS' Return

Jul 23 2007 | 4:16pm ET

The California Public Employees’ Retirement System posted its biggest return in a decade in the 12 months ended June 30, helped in part by its successful private equity investments.

CalPERS, the nation’s largest public pension fund, earned a 19.1% return on investment over the past year, more than double its expected rate of return. It now manages some $247.7 billion.

The pension’s Alternative Investment Management program—its private equity and venture capital arm—returned 23.3% in the 12 month ended May 31, trouncing its 15.6% benchmark. According to CalPERS, it now invests 6.2% of its assets in private equity.

Hedge funds, while also topping their benchmark, were not quite as impressive. CalPERS’ absolute return strategies rose 16.9%, a return dwarfed not only by p.e., but also its global equity portfolio (23.7% return), real estate (20.2%) and corporate governance funds (24%).

“Almost all of our asset classes returned over 20%, and we beat our benchmarks on all our major asset classes,” Russell Read, chief investment officer, said. “Our strategic asset allocation made us well-positioned to take advantage of strong capital markets performance, domestically and international.”

This is the fourth straight double-digit year for CalPERS, bring its 10-year average to 9.1%.

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