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CalPERS reports improved earnings

November 9, 2010 |  3:14 pm

The California Public Employees' Retirement System, the country's biggest government pension fund, closed out its 2009-10 fiscal year, reporting a net return on investments of 13.3%

The results for the 12 months ending June 30 represented a significant improvement from the 23.4% loss in the previous year during the worst recession since the Great Depression of the 1930s.

CalPERS ended the most recent fiscal year with a total portfolio worth $200.5 billion, substantially down from a record high of $260.4 billion on Oct. 31, 2007.

"This updated report indicates a gain of more than $40 billion since our turn-around from the lowest point of the recession in March 2009," said Chief Investment Officer Joseph Dear. "We also beat our benchmark of 12.95% and eclipsed return targets for every asset class except real estate. But even that asset class improved dramatically over what we reported in July."

CalPERS' reported significant gains in a number of areas: global fixed equity including bonds rose 20.4%; private equity 23.9%; publicly traded stocks up 14.4% and commodities, infrastructure, forestland and inflation-linked bonds up 8.7%.

Calperslogo Real estate investments dropped by 10.8% but did much better than an earlier estimate of minus 37.1%.

"These financial figures are good news for employers since investment gains will help mitigate increases in their contribution rates," said Dear.

The latest reported returns outpaced CalPERS' assumed target annual rate of return of 7.75%. However, pension fund officials are concerned that future returns can't be counted on to regularly exceed that level. The pension's board currently is considering cutting that assumed rate of return, which could translate into asking employers and employees to pay more.

CalPERS provides retirement security to 1.6 million active and retired state, local government and school employees and their families.

-- Marc Lifsher