CalPERS portfolio has lost $18 billion in value since July 1
After posting its best annual performance in 14 years, the California Public Employees' Retirement System is giving back a sizable portion of the 20.7% investment return it reported for the fiscal year that ended June 30.
The value of the country's largest public pension fund was $220 billion at market's close on Monday, down 7.6% or about $18 billion, CalPERS said Tuesday.
"It's bad, but it's not 2008," said Joseph Dear, CalPERS' chief investment officer, in an interview on CNBC. "We have a crisis induced by lack of confidence in the U.S. and European political systems, combined with gloomier and gloomier economic growth forecasts."
Wall Street's massive stock sell-off that began last week "is a tipping point," Dear said, "but it's not a time to panic and run with fear out of the market."
CalPERS was underweight in its stock portfolio at the close of the last fiscal year and now is "considering whether we can go back in" to make long-term investments, Dear said.
Though Dear said he didn't expect the U.S. economy to fall into a double-dip recession, he conceded that the outlook for short-term growth was not rosy.
Those comments contrasted with Dear's enthusiasm for the 20.7% investment return that CalPERS announced on July 18, covering the 2010-11 fiscal year.
"The portfolio is quite healthy with positive benchmark-beating gains for nearly all of our assset classes over the past year," Dear said at the time. "Global equity [public stocks], private equity, fixed income, inflation-linked and cash equivalents all did well, and our real estate portfolio is back in positive territory after reversals during the financial crisis and recession."
CalPERS' portfolio value dropped from a historic high of $260.4 billion in October 2007 to $160 billion in March 2009. It has since risen to a high of $237.5 billion on June 30 before dropping to $220 billion on Monday.
CalPERS' gains during the year ending June 30 were roughly in line with other large institutional investors, according to a report issued Tuesday by the Wilshire Trust Universe Comparison Service, which serves as a performance benchmark for similar investors.
The median return for all large institutional investors was 20.12%, the best showing since 1986, the report said. Public plans such as CalPERS posted a median return of 21.1%, corporate plans 20.4%, nonprofits 20% and labor union plans 19.9%, the report said.
-- Marc Lifsher in Sacramento
Photo: CalPERS Chief Investement Officer Joseph Dear. Credit: Los Angeles Times photo