US - California Public Employees' Retirement System (CalPERS) registered a 12.3% returns on investments over the year to June 30 and generated US$8bn more than it would have from its assumed rate of return of 7.7%.
The US$208bn pension fund exceeded industry benchmarks in five of eight major investment portfolios during the 2005-06 fiscal year.
CaLPERS’ 5% real estate allocation was the portfolio that gained most, returning 38.4% for its investments in office, retail, apartment, and industrial assets, and 36.5% for housing, land, and California urban real estate investments.
The NCREIF industry benchmark rate of return was 20.2%.
The fund’s alternative investment management programme which includes private equity and venture capital holdings, generated 19.2%, outperforming the 18.6% benchmark.
Its absolute return strategies also exceeded the hedge fund benchmark of 8% and garnered an 11.6% return.
Although international stocks generated the second-highest rate of return, they fell short of the 27.7% benchmark at 27.2%. Domestic stocks on the other hand beat the 9.5% benchmark at 9.6%.
CalPERS’ corporate governance funds fell short of the 20.3% benchmark and generated a 17% return.
The fund’s international fixed income investments also failed to beat the benchmark although they lost less than 1% when the benchmark gained less than two-tenths of percentage.
US fixed income investments, however, outperformed the -3% benchmark by losing 1.2%.
The fund’s average annual investment return over the last 10 years has been of 9.2% and this was the third year running in which the pension fund earned double digit returns.
Charles P. Valdes, chair, CalPERS investment committee said: Our diversified portfolio helped us weather what has been a volatile domestic public equity market in recent months, with strong performance again in real estate, international stocks and private equity.
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