CalPERS, CalSTRS announce annual gains in excess of 20%

CalPERS' assets have a market value of approximately $237.5 billion, up from $200.5 billion a year earlier. Gains from private equity came in at 25.3%, compared to 30.2% for public equities, 10.2% for real estate and 13.6% for commodities, infrastructure, forest land and inflation-linked bonds. Global fixed income trailed on 7%.

The value of CalSTRS' portfolio increased by $29 billion to $154.3 billion over the course of the year, with private equity gaining 22.5%. As with CalPERS, public equities posted the largest return at 31.9%, while fixed income performed poorest, gaining just 5.4%. The fund's real estate assets gained 17.5% and inflation-linked products rose by 13.6%.

The results suggest that the pension funds have rebounded from the lows of the global financial crisis, but both remain underfunded due to poor performance in the past decade.

CalPERS' has gained an annual average of 3.41% over the last five years, well short of its 7.75% target, largely thanks to a 23.4% loss in 2009, the biggest drop in the pension fund's history. Its asset value stood at $260 billion in October 2007. CalSTRS' average annual return over three years is 0.98%, well short of the 7.75% the fund has calculated it requires to meet obligations to retirees. Fending levels for both pension funds stand at about 70% of estimated liabilities.

Jack Ehnes, CEO of CalSTRS, noted that, without legislative action to raise contribution rates, the system will struggle. "Even given this past year's impressive performance, CalSTRS would need a more than 20% investment return each year for the next four years to achieve full funding in 30 years, an impractical expectation," he said in a statement.

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• Topics
• North America
• LPs
• Performance
• California Public Employees' Retirement System (CalPERS)
• California State Teachers’ Retirement System (CalSTRS)