(Bloomberg) — The California Public Employees’ Retirement System, the largest pension in the U.S., said it earned 2.4 percent last fiscal year, below its target rate as financial- market turbulence depressed stock and bond returns.
The $300 billion fund earned 1 percent on public-equity holdings and 1.3 percent in fixed-income investments, said Ted Eliopoulos, chief investment officer. Real estate returned 13.5 percent, while private equity gained 8.9 percent.
Calpers must average at least 7.5 percent a year to match its assumed rate of return or turn to taxpayers to make up the difference. Calpers is among pensions under pressure to boost investment returns as their unfunded liabilities tripled to almost $2 trillion from 2004 through 2013, according to Moody’s Investors Service.
“We try not to get too fixated or excited by any one-year return, whether it’s 18 percent from last year or a 2.4 percent return this year,” Eliopoulos told the pension’s governing board Monday at the start of a three-day meeting in Walnut Creek, a suburb of San Francisco.
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Calpers said it has earned 10.9 percent over a three-year period and 10.7 percent over five years. Its real-estate and private-equity returns lag by a quarter.
“The fund is outperforming our policy benchmark for the three-year period and for the five-year period,” Eliopoulos, 51, said. “That is the first time the fund has outperformed both of these time periods since 2007, which represents another milestone in the recovery of our portfolio.”