CalPERS posted double-digit returns for the fourth time in five years, returning 18.42% for the fiscal year ended June 30.
The return surpasses CalPERS’ custom benchmark of 17.98%. The Sacramento-based fund also outpaced its returns of 13.2% from the previous fiscal year.
The $300.9 billion California Public Employees’ Retirement System’s assumed rate of return is 7.5%.
CalPERS officials said the current returns were boosted by a strong equity market, which resulted in a 24.77% return for its global equity portfolio in the year ended June 30, 51 basis points above the system’s custom benchmark.
But CalPERS’ private equity returns of 19.99% were 331 basis points below the system’s custom benchmark.
Theodore “Ted” Eliopoulos, acting chief investment officer, said the private equity results were strong on an absolute basis and attributed the underperformance to the fact that CalPERS’ benchmark does not fully reflect short-term performance.
Returns for other key asset classes for the year include fixed income, 8.32%, 119 basis points above the custom benchmark; and real estate, 13.42%, 160 basis points above the benchmark.
Private equity and real estate returns both lag by a quarter.
The returns continue the upward trend for CalPERS. The system recently surpassed $300 billion in assets. Assets had been down to less than $170 billion in mid-2009, after the fund lost about a quarter of its assets during the 2008-2009 fiscal year because of the financial crisis.
Still, the system is only 76% funded.
“Much work still needs to be done,” Mr. Eliopoulous said at a news conference.
The CalPERS board approved a $1.2 billion increase for the state contribution to the pension plan in April to $5 billion total. The phase-in will take five years and started on July 1.