CalPERS Reports Preliminary 8.6 Percent Investment Return For Fiscal Year 2017-18
CalPERS today reported a preliminary 8.6 percent net return on investments for the 12-month period that ended June 30, 2018. CalPERS assets at the end of the fiscal year stood at more than $351 billion.
Strong returns came from the private equity program, which generated a 16.1 percent return, followed by public equity preliminary net returns of 11.5 percent. Real assets returned 8.0 percent, which included a 20.6 percent return from the infrastructure program.
Based on these preliminary fiscal year returns, the funded status of the overall CalPERS fund is an estimated 71 percent, an increase of 3 percentage points from the previous fiscal year. This estimate is based on a 7 percent discount rate.
"I am pleased we were able to exceed our expected rate of return based on our strong performance in the private and public equity portfolios," said Ted Eliopoulos, CalPERS chief investment officer.
"While it's important to note the portfolio's performance at the 12-month mark, I can't emphasize enough that we are long-term investors. We will pay pensions for decades, so we invest for a performance that will sustain the Fund for decades."
View Eliopoulos discussing the preliminary returns.
Additional returns include fixed income, which earned 0.4 percent, while inflation assets returned 9.3 percent for the fiscal year.
This brings total fund performance to 8.1 percent for the five-year time period, 5.6 percent for the 10-year time period, and 6.1 percent for the 20 -year time period. Over the past 30 years, the CalPERS fund has returned an average of 8.4 percent annually.
"While we are pleased with the positive returns, we're focused on improving our funded status," said Marcie Frost, CalPERS chief executive officer. "This will take time and will require us to explore new, forward-thinking approaches to our investments, particularly in private equity. Our primary goal is to ensure that our fund is strong for years to come."
Today's announcement includes asset class performance as follows:
|Net Rate of Return||Performance Relative to Policy Benchmarks|
|Total Fund||8.6%||(6) bps|
|Public Equity||11.5%||(42) bps|
|Private Equity||16.1%||(250) bps|
|Fixed Income||0.4%||38 bps|
|Real Assets||8.0%||119 bps|
|Real Estate||6.8%||(26) bps|
|Inflation Assets||9.3%||37 bps|
Returns for real estate and private equity reflect market values through March 31, 2018.
CalPERS' 2017-18 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 2019-20, and for contracting cities, counties and special districts in Fiscal Year 2020-21.
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.
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