CalPERS Reports Preliminary 11.2 Percent Investment Return For Fiscal Year 2016-17
July 14, 2017
Communications & Stakeholder Relations
Brad W. Pacheco, Deputy Executive Officer
Wayne Davis, Chief, Office of Public Affairs
Contact: Megan White, Information Officer
News media availability with CIO today at 10:35 PDT
SACRAMENTO, CA – The California Public Employees’ Retirement System today reported a preliminary 11.2 percent net return on investments for the 12-month period that ended June 30, 2017. CalPERS assets at the end of the fiscal year stood at more than $323 billion.
The strongest returns came from the Public Equity Program, which generated a 19.7 percent return. Private Equity’s preliminary net returns were 13.9 percent, followed by Real Estate, with preliminary net returns of 7.6 percent.
Based on these preliminary fiscal year returns, the funded status of the overall CalPERS fund is an estimated 68 percent, an increase of 3 percentage points from the previous fiscal year. This estimate is based on a 7 percent discount rate.
“I am proud of our investment team for achieving double digit returns this year,” said Ted Eliopoulos, CalPERS chief investment officer. “Our globally diversified portfolio performed well across most asset classes, and we were able to take advantage of what the market gave us. However, I want to emphasize that as pleased as we are with this one-year return, our focus is always on the long-term. We invest for decades, not years.”
“We will continue to work towards reducing the cost, risk, and complexity of the portfolio while also achieving the returns necessary to pay pensions the public service workers of California have earned.”
Additional returns include Fixed Income, which earned 0.3 percent, while Inflation Assets lost 2.7 percent for the fiscal year.
This brings Total Fund performance to 8.8 percent for the five-year time period, 4.4 percent for the 10-year time period, and 6.6 percent for the 20-year time period.
“CalPERS is focused on the long-term sustainability of our system,” said Marcie Frost, CalPERS chief executive officer. “Of course, we welcome this fiscal year’s strong returns, but we also remain about 68 percent funded and vulnerable to a downturn in stock markets. This will be our focus as we continue to move through the asset allocation process over the next six months.”
Today’s announcement includes asset class performance as follows:
|Net Rate of Return||Performance Relative to Policy Benchmarks|
|Total Fund||11.2%||(15) bps|
|Public Equity||19.7%||(18) bps|
|Private Equity||13.9%||(640) bps|
|Fixed Income||0.3%||115 bps|
|Real Assets||7.4%||43 bps|
|Real Estate||7.6%||24 bps|
|Inflation Assets||-2.7%||(83) bps|
Returns for Real Estate, Private Equity and some components of the Inflation Assets reflect market values through March 31, 2017.
CalPERS’ 2016-17 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 2018-19, and for contracting cities, counties and special districts in fiscal year 2019-20.
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.
CalPERS will continue its Asset Liability Management Review Cycle (PDF) throughout 2017. This review takes a holistic and integrated view of our assets and liabilities. At a November workshop, the Board will consider several different investment portfolio scenarios as it makes a decision on the fund’s overall asset allocation mix.
News Media Availability Today
Today CalPERS will hold news media availability at 10:35 a.m., PDT, with its Chief Investment Officer, Ted Eliopoulos, to discuss earnings for the 2016-17 fiscal year. To participate, call the toll-free number 888-324-9562 from the U.S., using the pass code “5184413” for call leader Wayne Davis. International callers may call 1-773-756-4814.
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 1.8 million members in the CalPERS retirement system and administers benefits for 1.4 million members and their families in our health program. CalPERS’ total fund market value currently stands at approximately $327 billion. For more information, visit www.calpers.ca.gov.