(August 20, 2013) — Misquotes of Monty Python aside, the largest US public pension has detailed how it has deployed $20 billion of its assets in its home state this week.
The California Public Employees’ Retirement System (CalPERS) said by the end of the fiscal year 2012 it had invested 8.9% of its entire portfolio within the state through various channels. By its calculations, these investments supported around 1.5 million jobs in the state—almost as many as the 1.6 million members in the pension system itself.
This figure was an increase on last year, when CalPERS reported a $19.4 billion investment, which supported 1.4 million jobs.
Critics may contend that CalPERS should spend more in the state; others may claim it should invest less there, and look further afield for its returns. The CalPERS report, however, said investments were in line with its fiduciary responsibility to members to provide a good and stable income.
On June 30, 2012, CalPERS invested:
$9.1 billion in 664 California-headquartered public companies, which employ 1,002,000 people in California.
$2.6 billion of fixed income capital in California, $692 million of which is invested in 42 California-headquartered corporate bond issuers employing 178,000 people in California.
$4.6 billion in 1,836 California-headquartered private companies, which employ 188,000 people in California.
$4.3 billion in 307 California-based real estate projects, which support 102,000 Californian jobs.
$94.2 million in seven California-based infrastructure projects, which support 2,000 Californian jobs.
Some 20.5% of its entire real estate portfolio was invested in the state, making it the highest percentage allocation of any one asset class made to the region. Some 48% of the allocation went on apartments and other general housing projects, with the same level of overall investments in the category being placed in low-to-middle income areas.
“The portfolio in California includes a diverse group of assets that provide ancillary benefits in the areas in which they are located, including the creation of construction jobs and economic activity connected to construction, the accommodation of new retail, industrial and commercial employers, and the anchoring of communities with real assets,” the report said.
In 2011, CalPERS agreed to spend up to $800 million on essential infrastructure in the state; the pension fund said it had held several meetings with key stakeholder on where investment was needed and how best to deploy capital in all parties’ interests. At the end of June last year, CalPERS had invested just under $1 billion in the state’s infrastructure.
Apple was the fund’s largest public equities holding in the state by the retirement system, with more than $1.7 billion invested in the state-based tech giant. Other firms attracting CalPERS capital included Chevron Corp., Wells Fargo, Google, Walt Disney, and eBay.
“CalPERS will continue to pursue California-based investment opportunities grounded in the historic strength of the state economy, seeking attractive risk-adjusted financial returns,” the report noted.
The pension did not report its return on assets invested in the state.
For the entire report, click here.
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