US - The US's two largest pension funds have reported double digit returns for 2010, marking a solid recovery after steep losses in the global financial crisis.
The California Public Employees' Retirement System (CalPERS) earned a 12.5% net return on investments for 2010, while the smaller California State Teachers' Retirement System (CalSTRS) ended the year posting a 12.7% return, boosting market values to levels not seen since October 2008.
Total fund assets at CalPERS closed 2010 at $225.7bn, with assets gaining more than $65bn since the fund's low point in March 2009, at $160bn.
CalPERS' private equity programme - the Alternative Investment Management (AIM) Programme - was the biggest gainer among asset classes in 2010, with a 21.5% overall return. The figure easily topped its benchmark by more than seven percentage points.
CalPERS' global equity investments returned 14.6% last year, with domestic stocks gaining 17.3% and international stocks returning 12.8%, both portfolios beating their benchmarks.
Although the fund's real estate portfolio saw an overall decline of 5% in 2010, the drop was the smallest since the beginning of the financial crisis.
"We repositioned our portfolio to take full advantage of the overall gains in the market last year," said CalPERS chief investment officer Joseph Dear. "The strong returns we saw in 2010 prove that our comprehensive evaluation of all our investments is paying off for our members, employers and taxpayers.
"During 2010, we reduced portfolio leverage and ended relationships with several real estate partners who didn't meet our expectations. Our current focus is on income-generating properties, and now that we're beginning to see signs of a rebound in the market we'll be ready to take advantage of opportunities as they arise."
Meanwhile, CalSTRS reported a rebound of more than $34.8bn since March 2009 to $146.4bn.
The total portfolio topped its benchmark by .24%, led by a 17.2% return from US equity and a 16.9% return from private equity. Non-US equity holdings returned 12.8%. All three asset classes beat their benchmarks, as did the fixed income portfolio, with an 8%return. Real estate holdings posted a return of 0.01%.
CalSTRS said it also benefited from temporarily moving 5% of the portfolio from global equities to fixed income, real estate and private equity to take advantage of the distressed market and permanently shifting 5% of the portfolio from global equities to create a new absolute return asset class for inflation-protection.
"While we've set the groundwork for a slow but steady recovery, we still have to work through the losses we took in 2008," said CalSTRS chief investment officer Christopher J. Ailman.
"Nonetheless, we're beginning to see the first green shoots of a rebound from the financial crisis."
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