Press Release

September 10, 2007

Contact: Clark McKinley / Pat Macht
Office of Public Affairs
(916) 795-3991

CalPERS Approves Infrastructure Investment Program and Pilot Inflation-Linked Asset Class

SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) took the first step today toward establishing a formal focused inflation-linked asset class that would include an allocation of up to $2.5 billion in a pilot infrastructure program.

The infrastructure program will take advantage of major investment opportunities in the construction of roads, bridges, airports, utilities, water systems and other projects.

The effect of CalPERS Board of Administration action today is to reclassify $573 million of existing certain investments from private equity, real estate and fixed income – and place them in the provisional new asset class.

“We hope to generate stable, attractive investment returns with low to moderate risk as we deploy capital to meet a reported need of $1.6 trillion for U.S. infrastructure projects over the next five years,” said Rob Feckner, CalPERS Board President. “These pilot programs are our first step toward recognizing that opportunity and a step toward further diversifying our portfolio.”

Charles P. Valdes, Investment Committee Chair, said of today’s action:

“This new asset class should give us a hedge against inflation. It enhances diversification, gives us a bigger net in the market and reaches across private equity, fixed income, and real estate sectors. CalPERS could become a major player in solving some pressing public policy problems related mainly to energy and transportation.”

Infrastructure is not the only investment type that would be contained in the inflation-linked asset class. Other components are commodities, inflation-linked bonds, and timber. 

Currently, CalPERS has approximately $450 million in commodities investments, $123 million in timberland, inflation-linked bonds in its fixed income asset class, and infrastructure investments in real estate accounts and its Alternative Investment Management (AIM) Program. Those assets will be shifted into the pilot inflation-linked asset class as early as October 1, 2007.

Policy allocations will be recommended for the asset class and programs as early as December, following the CalPERS Board’s Asset/Liability Management Workshop in November.

For more information on inflation-linked assets and the pilot program, please see a Fact Sheet posted in the Press Room of www.calpers.ca.gov.

CalPERS is the nation’s largest public pension fund with more than $245 billion in assets. It provides retirement and health benefits to approximately 1.5 million California State, local agency and schools employees and their families. For more about CalPERS, visit www.calpers.ca.gov.

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Dated: 09-10-2007