CalPERS Adopts New Asset Allocation Mix

Equalizes U.S., International Stocks; Hikes Private Equity, Real EstateSACRAMENTO, CA – The California Public Employees’ Retirement System Board of Administration adopted a new investment asset allocation for its $250 billion portfolio to deliver optimum risk-adjusted investment returns over the next three years.CalPERS will continue to target two thirds or 66 percent of its portfolio to public and private equities combined. Fixed income and inflation-linked assets combined will be 24 percent. Real Estate asset allocation will be 10 percent.Global publicly-traded stocks, which were 60 percent of the total portfolio, will move downward to 56 percent and will be evenly split between U.S. stocks and international stocks. Private equity, which was 6 percent, will gain assets as it moves to 10 percent, offsetting the decrease in publicly-traded equities.  Similarly, Fixed Income’s target will decrease from 26 percent to 19 percent; the new inflation linked assets will have a 5 percent allocation. Real estate’s 10 percent allocation is a 2 percent increase over the previous allocation of 8 percent.   “We have achieved strong results for the last four years, but that is not a guarantee that we would be as successful with the existing allocation,” said Rob Feckner, CalPERS Board President. “This new asset allocation – with its emphasis on international stocks, venture capital, commodities, real estate and infrastructure – is the right mix to help us provide for our retirees and minimize the need for taxpayer dollars.” Historically, 75 cents of every dollar for retirement benefits comes from investment earnings.CalPERS investment officers will use the targets to deploy capital over the next two to three years, when the Board tentatively is scheduled to again review and revise the allocation mix, based on dynamic market trends.For the rest of this article please feel free to visit www.calpers.ca.gov.