Executive Summary - CalPERS
As the nation's largest public pension fund, we play a vital role in California's economy, providing retirement and health benefits to over 1.9 million public employees, retirees, and their families, and 2,892 employers.
CalPERS for California examines our investment portfolio as of fiscal year ending June 30, 2018. It describes the scale and breadth of our investments in companies, properties, and projects in California, and the additional benefits from our private market investments. This report does not examine the financial performance of our investments.
Our investment goal in California is to achieve appropriate risk-adjusted return. All our investments must be consistent with the fiduciary responsibility of our Board of Administration and its duty to protect the financial security of our members. Like many other large institutional investors, we diversify our portfolio among categories of investments, called "asset classes," to reduce our exposure to any one market risk and maximize our return on investment. Our investment decisions are guided by our Pension Beliefs (PDF) and are made in accordance with our strategic asset allocation policy and risk management system.
As the world's fifth largest economy, California offers a wide array of attractive investment opportunities for all investors. Investment in California by our staff and external managers and advisors reflects the strength and diversity of California's economy and the quality of its companies, properties, and other investment opportunities. The capital that we invest in California is usually not explicitly directed to the state but is the consequence of a typical institutional investment process weighing the financial merits of companies, properties, and projects, regardless of location. The size and dynamism of California's economy are the primary drivers of our significant exposure to local communities and the related benefits that this brings, like job creation.
The data in this report offers a snapshot of our investments and has been analyzed by Pacific Community Ventures (PCV), a third-party research organization. The research methods in this report are fully documented in footnotes. The difficulty of attributing ancillary benefits directly to us is especially notable and explains why any ancillary benefits associated with public market investments are excluded from this report.
As of June 30, 2018, we had invested 9.5 percent or $33.5 billion of our $351.8 billion in total assets in California.
CalPERS Investments in CA by Asset Class: June 30, 2018
Total Portfolio Value (in Billions)1
Dollars Invested in California (in billions)
Percentage of Dollars Invested in CA
Annual Percentage Change in Dollars Invested in CA
Total $351.8 $33.5 9.5% 11.6%
Global Equity $171.8 $17.5 10.2% 20.7%
Global Fixed Income $79.1 $5.7 7.2% 54.1%
Private Equity $27.2 $1.0 3.7% (54.5%)2
Real Assets3 $36.1 $9.3 25.8% (3.1%)
Other4 $37.6 — — —
The 11.6 percent increase in dollars invested in California over the last year is a result of increases across global equity and global fixed income. Factors driving year-over-year changes in dollars invested in California are described as follows for each asset class:
Global equity: Market gains in existing California holdings have led to an increase in dollars invested in California. This increase has been driven by the strong overall performance of the U.S. stock market including technology companies, of which many are based in California
Global fixed income: Our increased exposure to corporate bonds and structured securities, which have maintained a consistent weighting towards California-based investments, led to an increase in fixed income dollars invested in California.
Private equity: Sales outpaced acquisitions, resulting in cash returns and a reduction in private equity exposure in California.5
Real assets: Over the past year, the sale of real estate properties in California, particularly retail and housing properties, has led to a decrease in dollars invested in real assets in California.
We have had 8 percent or more of our assets invested in California since 2010. The following chart depicts our exposure in California.
In addition to our goal of achieving appropriate risk-adjusted returns, our investments can also strengthen the communities in which they're located.
The additional benefits of our private investments in California, for instance, include the support of local jobs, infrastructure for communities and commerce, and business expansion and related economic activity. As of June 30, 2018, our active private markets investments in California have resulted in $36.5 billion in total economic activity across the state, benefiting not only businesses and projects receiving capital directly from us, but also suppliers, workers, and the public sector broadly through tax revenues.6
The total number of jobs supported by our investments in private markets is shown below.
Jobs by Asset Class: June 30, 20187
Private Markets Total
View Map of All CalPERS Private Market Assets in California (JPG)
Next Section: Public Markets
1 Willshire Associates, Executive Summary of Performance for California Public Employees' Retirement System (PDF). (June 30, 2018)
2 The decrease in our private equity exposure in California is also the result of a correction to reporting on our private equity investments. In 2017, several hundred companies that we had exited or liquidated were incorrectly included in the reported data that was used in the analysis of our private equity dollars invested in California.
3 For the purposes of this report, real assets encompass our real estate and infrastructure investments.
4 Our total portfolio value was $351.8 billion at June 30, 2018. The five asset classes above do not comprise the entire portfolio. "Other" consists primarily of forestland, inflation linked securities, absolute return strategies, cash, and cash-equivalents.
6 Total economic activity in California is calculated as of June 30, 2018 and uses data from our California private market investments in private equity, real estate, and infrastructure.
7 For methodologies for calculating the number of jobs supported in California please refer to individual asset class sections within the report.