CalPERS reported a preliminary 11.4% return for the one-year period that ended June 30, a sharp reversal from the previous year, confirmed spokesman Clark McKinley.
The $199.4 billion California Public Employees' Retirement System, Sacramento, had lost 23.4% in the fiscal year that ended June 30, 2009.
“The positive returns over the last year are due to many factors, including the stabilization in the financial industry and the increase in market liquidity,” said Chief Investment Officer Joe Dear, in a news release. “Many asset classes have exhibited strength amid signs of stabilization and recovery in the economy.”
In the release, Mr. Dear stated that all asset classes but one had gains. Private equity was up 30.9%; global fixed income, 19.5%; public equity, 14.4%; and commodities, infrastructure, forestland and inflation-linked bonds were up a combined 2.7%. The exception, real estate, declined 37.1%.
“Real estate declines reflect write-offs and deleveraging a portfolio that relied too heavily on borrowing at the peak of the bubble in 2005 and 2006,” Mr. Dear said. “Our new real estate team has been completely restructuring 24 separate accounts. We're moving back into core properties and accepting managers in whom we have confidence. We're letting go underperforming managers and looking for the best possible deals as they become available in a still-sluggish market.”
The returns for real estate, private equity and some components of the inflation-linked asset class reflect market values through March 31; all of the others are as of June 30.
No details were provided as to how many managers were let go. Mr. Dear was unavailable for comment, according to Mr. McKinley.