CalPERS Reports Preliminary 2014-15 Fiscal Year Investment Returns
July 13, 2015
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Joe DeAnda, Information Officer
News media availability with CIO and senior team at noon PDT
SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) today reported a preliminary 2.4 percent net return on investments for the 12-months that ended June 30, 2015. CalPERS assets at the end of the fiscal year stood at more than $301 billion.
Over the past three and five years, the Fund has earned returns of 10.9 and 10.7 percent, respectively. Both longer term performance figures exceed the Fund's assumed investment return of 7.5 percent, and are more appropriate indicators of the overall health of the investment portfolio. Importantly, the three- and five-year returns exceeded policy benchmarks by 59 and 34 basis points, respectively. A basis point is one one-hundredth of a percentage point.
"It's important to remember that CalPERS is a long-term investor, and our focus is the success and sustainability of our system over multiple generations," said Henry Jones, Chair of CalPERS Investment Committee.
It marks the first time since 2007 that the CalPERS portfolio has performed better than the benchmarks for the three- and five-year time periods, and is an important milestone for the System and its Investment Office. CalPERS 20-year investment return stands at 7.76 percent.
"Despite the impact of slow global economic growth and increased short-term market volatility on our fiscal year return, the strength of our long-term numbers gives us confidence that our strategic plan is working," said Ted Eliopoulos, CalPERS Chief Investment Officer. "CalPERS continues to focus on our mission of managing the CalPERS investment portfolio in a cost-effective, transparent and risk-aware manner in order to generate returns to pay long-term benefits."
The modest gain for the fiscal year - despite challenging world markets and economies - was helped by the strong performance of CalPERS real estate investments, approximately ten percent of the fund as of June 30, 2015. Investments in income-generating properties like office, industrial and retail assets returned approximately 13.5 percent, outperforming the Pension Fund's real estate benchmark by more than 114 basis points.
Overall fund returns and risks continue to be driven primarily by the large allocation to global equity, approximately 54 percent of the fund as of June 30, 2015. The Global Equity portfolio returned one percent against its benchmark returns of 1.3 percent. Key factors over the past twelve months include the strengthening of the US dollar versus most foreign currencies, as well as challenging emerging market local returns. Fixed Income is the second largest asset class in the fund, approximately 18 percent as of June 30, 2015, and returned 1.3 percent, outperforming its benchmark returns by 93 basis points.
Private Equity, approximately nine percent of the fund as of June 30, 2015, recorded strong absolute returns for the fiscal year, earning 8.9 percent, while underperforming its benchmark by 221 basis points.
|Today's announcement includes asset class performance gains as follows:|
Returns for real estate, private equity and some components of the inflation assets reflect market values through March 31, 2015.
CalPERS 2014-15 Fiscal Year investment performance will be calculated based on audited figures and will be reflected in contribution levels for the State of California and school districts in Fiscal Year 2016-17, and for contracting cities, counties and special districts in Fiscal Year 2017-18.
News Media Availability Today
Today the Pension Fund will hold a telephone news media availability at 12:00 p.m., PDT, with its chief investment officer and senior investment officers to discuss earnings for the 2014-15 Fiscal Year. To participate, call the toll-free number (888) 469-1238 from the U.S., using the pass code "CalPERS" for call leader Joe DeAnda.
For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 1.7 million members in the CalPERS retirement system and administers benefits for 1.4 million members and their families in our health program. CalPERS' total fund market value currently stands at approximately $300 billion. For more information, visit www.calpers.ca.gov.