CalPERS Preliminary Performance
CalPERS Asset Class Gains

From the CalPERS press release:

The California Public Employees’ Retirement System (CalPERS) today 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.”

CalSTRS 2012-13 Performance Chart
CalSTRS 2012-13 Performance Chart

From the CalSTRS Press Release:

Steady growth in the global equity market fueled a 13.8 percent investment return at the California State Teachers’ Retirement System (CalSTRS) to close the 2012–13 fiscal year. However, CalSTRS still faces significant long-term funding challenges.

The picture for the fiscal year spanning July 1, 2012 to June 30, 2013 shows investment returns well above the actuarial assumed rate of 7.5 percent. On a long-term, portfolio-wide basis, CalSTRS returns follow:

  • 12.6 percent over three years
  • 3.7 percent over five years
  • 7.5 percent over 10 years
  • 7.5 percent over 20 years

The CalSTRS Investment Portfolio’s market value for the fiscal year ending June 30, 2013 was $165.8 billion.

“These numbers are very encouraging,” said CalSTRS Investment Committee Chairman Harry Keiley. “While we take great pride in the dedication and acumen of our investments staff at CalSTRS, the reality is that even good investment performance addresses only part of the long-term needs of the fund, which suffered a severe setback in the crash of 2008.”

Investment returns have been erratic over the past several years. The current performance followed a lackluster year with the fund returning only 1.8 percent in 2011–12, preceded by a 23.1 percent return in 2010–11. As of June 30, 2012, CalSTRS was 67 percent funded with an unfunded actuarial obligation—or funding gap—of $70 billion.

 

Chart of the Day: July 16, 2013
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