Calpers Reports 8.6% Gain on Investments, Beating Its Target

(Bloomberg) -- The California Public Employees’ Retirement System, the largest U.S. pension, posted an 8.6 percent investment gain in the fiscal year ended June 30, beating its long-term annual target but trailing last year’s performance.

Private equity helped drive the fund’s overall performance, generating a 16.1 percent return, according to a statement Thursday. Stocks, which comprise almost half the portfolio, had a preliminary net return of 11.5 percent. Real assets, mostly real estate, gained 8 percent. Fixed-income rose 0.4 percent.

The system, with $351 billion as of June 30, had an estimated 71 percent of the funds it needs to meet its long-term liabilities, up from 68 percent at the end of fiscal 2017. Its annual target is 7 percent. In the 2016-2017 fiscal period Calpers reported an 11.2 percent gain. Public pensions are struggling to meet long-term liabilities as they face obligations from a wave of longer-living retirees and as risks rise that the nine-year bull market will end.

“While we are pleased with the positive returns, we’re focused on improving our funded status," said Marcie Frost, Calpers chief executive officer, in the statement. "This will take time and will require us to explore new, forward-thinking approaches to our investments, particularly in private equity.”

Here’s how the fund, and its asset classes, performed in the previous four years.

Fiscal YearTotal ReturnEquitiesPrivate Equity Fixed IncomeReal Asset 
201711.2%19.6%13.9%0.3%7.4%
20160.6-3.41.79.36
20152.418.91.312.4
201418.424.8208.313.4

Source: Calpers financial reports.

Calpers, based in Sacramento, serves 1.9 million public employees, retirees and their families. The California State Teachers’ Retirement System, the second-largest U.S. pension, reports results next week.

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