US- CalPERS, the US’s largest public pension fund, has reported a 5.9% loss in annual earnings, according to its fiscal year report. The pension fund ended the period with assets valued at $143.4bn.
Unsurprisingly, equity investments experienced the greatest losses for the Californian public employees’ retirement system. US stocks lost 16.8% and international stocks declined 10.2%. Together, US and international public equities represent around 57% of CalPERS’s assets.
Private equity investments, which account for 5% of assets posted a 7.8% loss. Real estate, US and international bond investment returns softened the blow. 29% of CalPERS’s assets are invested in US and international bonds, which returned 15.3% during the year, just short of the 15.7% return posted by its benchmark, the Salomon Brothers World Government Index.
Real estate investments, accountable for 9% of CalPERS’s assets, returned 11.8% and helped to contain the losses.
Annualised return for the five-year period ended 30th June 2002 is 5.4%, and for a 10-year period the fund earned 9.4%. In both cases CalPERS’s earnings are above the average returns posted by other retirement systems.
The system will not be increasing employer rates to compensate for the shortfall in the fund, however. According to CalPERS, 70% of its local public agencies are overfunded which will reduce any immediate financial impact.