CalPERS Adopts New Investment Strategy

The California Public Employees’ Retirement System (CalPERS) board of administration has adopted a new investment asset allocation for its $250 billion portfolio to deliver optimum risk-adjusted investment returns over the next three years.

The system will continue to target two thirds (66 percent) of its portfolio to public and private equities combined, and 24 percent on fixed income and inflation-linked assts combined. Real estate asset allocation will see about 10 percent, a 2 percent increase over the previous 8 percent allocation.

Global publicly traded stocks, which were 60 percent of the total portfolio, will move downward to 56 percent and will be evenly split between U.S. and international stocks. Private equity, which was 6 percent, will gain assets as it moves closer to 10 percent, which will offset the decrease in publicly traded equities.

Likewise, fix income’s target will be reduced from 26 to 19 percent, and the new inflation-linked assets will have an allocation of 5 percent. 

“We have achieved strong results for the last four years, but that is not a guarantee that we would be as successful with the existing allocation,” said Rob Feckner, CalPERS board president, in a statement. “This new asset allocation – with its emphasis on international stocks, venture capital, commodities, real estate and infrastructure – is the right mix to help us provide for our retirees and minimize the need for taxpayer dollars.”