US -The California Public Employees’ Retirement System (CalPERS) posted a 13.5% return last year, with corporate governance investments gaining about 28%.
A statement from CalPERS’ chief investment officer Mark Anson said that the fund had reached an “all-time record high” of $182.9bn (€140.9bn) in assets -- $21.5bn more than in 2003.
CALPERS, the largest public pension fund in the US, noted that the 2004 performance marked the second consecutive year of double-digit returns. In 2003 the fund returned 23.3% and beat its benchmark by 200 bps.
The scheme needs a 7.75% average annual return to meet projected retirement obligations to retirees.
“These gains, once again, will have a positive impact down the road on reducing employer contributions and lifting the taxpayers’ burden,” said Rob Feckner, acting board president and chair of the CalPERS investment committee.
The scheme’s investments in funds that use corporate governance strategies on ailing companies posted the highest return, nearly 28%.
Investments in housing, timber and other specialised real estate assets earned 24.6% while investments such as office, retail, apartment and industrial assets, gained more than 18.9%
International stock investments yielded more than 21.6%, slightly over the fund’s international investment benchmark of 21.5%, while the fund’s US stock investments earned 11.7%.
International fixed income investments gained 12.5% compared with its Salomon Brothers World Government Index benchmark of 12%. US fixed income investments earned 7.4%, beating its 6.7% benchmark.
Assets of the alternative investment management (AIM) programme, which specialises in private equity holdings, grew by 17.8% compared with a benchmark gain of 11.1%. CalPERS said the programme earned $2.8bn in cash profits in 2004.
Hedge funds returned 8.9% compared with a benchmark 6.8%.
CalPERS allocates 68% to equities, 26% to bonds and ‘other fixed income’ and 6% in real estates
Last month the scheme rebuffed California governor Arnold Schwarzenegger's plan to shift the state’s pension schemes to defined contribution, saying the "slap-dash" idea would be a disaster for everyone.