Sacramento, Calif. – CalPERS today reported a preliminary 6.7 percent net return on investments for the 12-month period that ended June 30, 2019. CalPERS assets at the end of the fiscal year stood at more than $370 billion.
Drivers of the return included the Fixed Income program, which generated a 9.6 percent net return, followed by Private Equity and Public Equity net returns of 7.7 percent and 6.1 percent returns respectively.
Based on these preliminary fiscal year returns, the funded status of the overall CalPERS fund is an estimated 70 percent, down less than a percentage point from fiscal year 2017-18. This estimate is based on a 7 percent discount rate.
“This was a very volatile year for financial markets, but I’m pleased with how we focused on the performance of the total fund,” said Yu (Ben) Meng, CalPERS Chief Investment Officer.
“We saw good returns in several key areas. Our long duration fixed income portfolio contributed positively as interest rates fell. And we are pleased with the outcome of some allocation changes made during the year, which we estimate contributed 70 basis points to fund performance.
“While we did not achieve our 7 percent actuarial return target this fiscal year, I can’t stress strongly enough that we are long-term investors. We make decisions based on an investment horizon that stretches across years and even decades. That’s our focus, and we will continue to analyze all aspects of our portfolio to see how we can generate higher risk-adjusted total returns for our members.”
This year’s return brings total fund performance to 5.8 percent for the five-year time period, 9.1 percent for the 10-year time period, and 5.8 percent for the 20 -year time period. Over the past 30 years, the CalPERS fund has returned an average of 8.1 percent annually.
Today’s announcement includes asset class performance as follows:
Net Rate of Return
Total Fund 6.7%
Public Equity 6.1%
Private Equity 7.7%
Fixed Income 9.6%
Real Assets 3.7%
Returns for real estate and private equity reflect market values through March 31, 2019.
CalPERS’ 2018-19 final fiscal year investment performance will be calculated based on audited figures and will be reflected in contribution levels for the State of California and school districts in Fiscal Year 2020-21, and for contracting cities, counties, and special districts in Fiscal Year 2021-22.
The ending value of the CalPERS fund is based on several factors and not investment performance alone. Contributions made to CalPERS from employers and employees, monthly payments made to retirees, and the performance of its investments, among other factors, all influence the ending total value of the Fund.
For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 1.9 million members in the CalPERS retirement system and the Public Employee Retirement Fund market value currently stands at approximately $373billion making us the largest defined-benefit public pension in the U.S. Additionally, we administer benefits for more than 1.4 million members and their families in our health program. For more information, visit www.calpers.ca.gov