The largest U.S. public pension fund is searching for undervalued stocks it can scoop up amid a tariff-fueled downturn that has erased billions from its market value.
The California Public Employees’ Retirement System, Sacramento, isn’t “immune to these market challenges,” which will likely affect its annual investment returns due next month, according to CalPERS CIO Stephen Gilmore.
“On the upside, market volatility can present opportunities to buy assets that may be oversold relative to their real value,” Gilmore said in a statement. “Those purchases can boost our portfolio in the years to come.”
The fund has lost about $25 billion of total market value since late February and oversaw about $509 billion as of market close April 7. As of Feb. 28, the fund had allocated almost 40% of its holdings to stocks.
The downturn after the April 2 tariffs — which at one point wiped out roughly $10 trillion from equity markets worldwide — adds a new challenge for CalPERS. The fund needs to make a 6.8% return to ensure pension payments for more than 2 million retired police, firefighters and public services employees.
While CalPERS outpaced that rate of return in its 2023-24 fiscal year, municipalities across California might have to cut public services to meet pension obligations if it falls short in the future.
President Donald Trump’s new tariffs are creating volatility for the pension funds that is akin to COVID-19 pandemic and the 2008 financial crisis, according to Gilmore.
“Long-term investors are careful to not react too quickly or strongly to any given day’s headlines,” he said in the statement, adding that CalPERS is still “carefully assessing the impact of recent events.”
