Money & Company

Tracking the market and economic trends
that shape your finances.

« Previous Post | Money & Company Home | Next Post »

CalPERS and CalSTRS both see big gains

July 18, 2011 | 12:58 pm

The nation’s two largest pension funds both posted their best returns in more than a decade.

The California Public Employees' Retirement System pension fund grew 20.7% in the fiscal year ended June 30, its best return in 14 years. The California State Teachers’ Retirement System fund increased  23.1%, the best it has done in a quarter of a century.

Despite the record increases, neither fund has recovered the massive losses they both experienced during the financial crisis and the returns will not immediately lower the contributions expected from employees or the state.

“It’s a good year. CalPERS is clearly back -- but we have a lot of work to do,” said Joseph Dear, CalPERS' chief investment officer.

The good returns at both funds were led primarily by the rising stock market, which increased even more than the funds as measured by the Standard & Poor’s 500 index. The S&P 500 rose 28.1% during the same time period.

CalSTRS' stock portfolio rose 31.9% while CalPERS' rose 30.2%. The private equity portfolios at both funds also did well, increasing 25.3% at CalPERS and 22.5% at CalSTRS.

The results were pulled down by the bond portfolios, which did well last year, and real estate holdings, which continue to struggle. The bond portfolio increased 7% at CalPERS and 5.4% at CalSTRS, while the real estate holdings rose 10.2% in value at CalPERS and 17.5% at CalSTRS.

-- Nathaniel Popper