CalPERS reports double-digit return on investments
The California Public Employees' Retirement System (CalPERS) reported a 12.5 percent return on investments for the 12 months that ended June 30, 2013, outperforming its benchmark by 1.5 percentage points. CalPERS assets at the end of the fiscal year stood at more than $257.8 billion.
The gain was led by strong performances by CalPERS global public equity and real estate investments. Investments in domestic and international stocks returned 19 percent, outperforming the CalPERS custom public equity benchmark by nearly one percentage point. Investments in income-generating real properties like office, industrial and retail assets returned 11.2 percent, outperforming the Pension Fund's real estate benchmark by 1.4 percent.
"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 12.5 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 7.6 percent, while its return since 1988 is 8.5 percent.
“We’ve taken many steps to strengthen our internal investment controls and risk management to drive better performance,” said Rob Feckner, President of the CalPERS Board. “I’m very proud of the reforms that our Board has made and the resiliency of our investment staff to remain focused on our long-term goals.”
Returns for real estate, private equity and some components of the inflation assets reflect market values through March 31, 2013 (not June 30, 2013). Final performance including the last quarter of the fiscal year will be available after asset valuations are completed.
"CalPERS is a long-term investor and we try to not focus too much on one year of performance," said Henry Jones, Chair of CalPERS Investment Committee. “But obviously 12.5 is a great number and we’re pleased with the performance.”
Investment returns are based on compounded daily earnings over the year, including continuing member contributions and benefit payments, and do not precisely correspond to one-year changes in CalPERS overall portfolio market value.
Employer contribution rates that use CalPERS 2012-13 Fiscal Year investment performance will be calculated based on audited figures and will be reflected in contribution levels for the State of California in Fiscal Year 2014-15, and for contracting cities, counties and special districts in Fiscal Year 2015-16.
CalPERS is the largest public pension fund in the U.S. The retirement system administers retirement benefits for more than 1.6 million current and retired California State, public school, and local public agency employees and their families on behalf of more than 3,000 public employers in the state, and health benefits for 1.3 million enrollees. For more information about CalPERS, visit www.calpers.ca.gov