US - Several top US pension funds are shifting their investment strategies away from traditional equities to focus on better-performing alternatives in a global market that has been less than kind to institutional investors.
But despite their efforts, CalPERS and CalSTRS last month posted yearly losses, reflecting the global market downturn.
CalSTRS, the second-largest pension fund in the US, posted a 3.7% loss in the year ended June 30 due to the country's stock portfolio losses, said Christopher Ailman, the pension fund's chief investment officer.
While the fund lost approximately 20% of its stock portfolio, its real estate and private equity allocations both gained 11.5% and its fixed income allocation returned 6.1%.
CalPERS, the US's largest pension fund, reported a 2.4% loss for the year ended 30 June. Still, it reported the largest returns from its private equity investments, which totalled 9.9% of its portfolio as of 30 April and returned nearly 20% for the year ended 31 March.
In addition, the fund's global fixed income investments saw a 7.7% return while its real estate investments saw a 8.1% return for the year ended 31 March.
"The current fiscal and calendar years have been flat, mainly because of the public stock downturn," said a spokesman at CalPERS.
"Since we're a long term investor with a strongly diversified portfolio, we've been able to limit our overall losses in the market, especially with significant high returns in private equity.
"That said, we lost $50bn during the last recession - [assets] fell from $178bn to $128bn - but came storming back with four successive big years to more than recoup."
CalPERS has since boosted its private equity, real estate and inflation-linked allocations, though public equity still makes up more than half of the fund's total asset allocations.
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