CalPERS announces change to asset allocation
US- CalPERS, America's largest public pension fund, is to reallocate assets from its global fixed income portfolio to real estate and private equity.
The Californian public employees' retirement system will raise its target allocation for real estate from eight to nine percent, and the pension fund's private equity investments from six to seven percent. The reallocation will result in a decrease of CalPERS' global fixed income target from 28% to 26% of the fund's assets.
"Equity investments make the most sense in the long-term," said William Crist, president of the CalPERS board. "This minor adjustment will increase our ability to pay members' retirement benefits without continued increases in employer contributions."
Michael Flaherman, chairman of the CalPERS investment committee added: "this new mix will position us to take advantage of opportunities in the real estate and private equity markets, but no immediate buying in real estate and private equity will occur. We will lock in profits on our bond portfolio. We will be cautious and selective in funding new investments."
The change in investment strategy marks the first shift in asset allocation for CalPERS in nearly two and a half years. Investments in domestic and international equities will remain the same at 39% and 19% of the fund's assets respectively.
As of the end of August this year, CalPERS assets stood at $136bn with approximately $76.8bn invested in US and international stocks, $41.2bn in US and international bonds, $12.8bn in real estate, and $6.9bn in private equity.