The California Public Employees’ Retirement System reported a preliminary net return of 5.8% on its investments for the 12 months ending June 30, beating its benchmark’s return of 5.5% to raise its asset value to $462.8 billion. According to CalPERS, its estimated funded status is currently 72%.
The return is a significant improvement from fiscal 2022, when CalPERS’ preliminary net investment return was a 6.1% loss.
“Even with the economic challenges that still confront institutional investors, we have been able to maintain our focus on meeting the long-term retirement promises made to our members and their families,” CalPERS CEO Marcie Frost said in a release.
Public equities were the top-performing asset class for the pension giant, earning a 14.1% return during the fiscal year and matching its benchmark’s performance. Private debt, which was only established as a separate asset class last year, was the next best performing asset, returning 6.5% and easily beating its benchmark’s return of 3.7%.
The fund’s fixed-income investments were flat for the year, as was its benchmark, while its private equity assets and real assets lost 2.3% and 3.1%, respectively. Despite the losses, they outperformed their benchmarks, which lost 5.9% and 4.0%, respectively.
“The resiliency of the stock market—particularly since the start of the calendar year—has created a solid base for the investment team to implement innovative approaches in delivering added value,” CalPERS CIO Nicole Musicco said in the release.
CalPERS reported five-year annualized returns of 6.1%; 10-year annualized returns of 7.1%; 20-year annualized returns of 7%; and 30-year annualized returns of 7.5%. The pension fund’s assumed rate of return is 6.8%.
The pension fund noted that the preliminary returns provide an early snapshot of its portfolio and that the official total fund performance will undergo additional review over the next few months by outside experts, as well as CalPERS’ investment and finance officials. The ending value of the portfolio will be based on factors other than investment returns, such as employer and employee contributions, monthly payments made to retirees and investment fees.
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Tags: California Public Employees’ Retirement System, CalPERS, fiscal 2023, Marcie Frost, Nicole Musicco, Pension Fund, preliminary return, Private Debt, public equities