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CalPERS' Hedge Fund Investments Return 8.9% in 2004

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SACRAMENTO, Calif. (–Thanks in part to its hedge fund investments, the California Public Employees’ Retirement System earned a 13.5% return in 2004 and grew by US$21.5 billion to US$182.9 billion.

The growth in assets means CalPERS is bigger than it’s ever been and by far the largest public pension fund in the United States. The 13.5% return bested the 7.75% average annual return the fund needs to meet projected benefit obligations, fund officials said in a news release.

CalPERS’ hedge fund program, which trustees recently voted to double in size to US$2 billion, earned 8.9% last year, more than 200 basis points above its 6.8% benchmark.

But hedge funds weren’t the best-performing assets for the massive fund. In fact, they were among the worst in terms of total return.

The pension fund’s allocation to funds that follow corporate governance strategies to turn around ailing companies earned 28% last year. Housing, timber and other special real estate investments earned 24.6%. International equities returned 21.6%. Private equity holdings grew by 17.8%. International fixed income earned 12.5%.

Only U.S. fixed income performed worse than hedge funds, at 7.4%.

“This performance hit on all cylinders,” said Rob Feckner, acting president of CalPERS board of trustees and chairman of the investment committee, in a statement.

Added CalPERS’ Chief Investment Officer Mark Anson, “This good performance is a testament to the guidance of the board and the quality of the day-to-day management of assets by our professional staff.”

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Contact Bob Keane with questions or comments at: [email protected].


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