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CalPERS enjoys 12.5% annual gains, thanks to real estate, stocks

Real estate and stocks generated a nifty performance during the just-completed fiscal year for California Public Employees’ Retirement Service (CalPERS).

The massive pension fund enjoyed a 12.5% gain during the fiscal year, outperforming its benchmark by 1.5 percentage points, officials say. The annual increase easily outpaces 20- and 25-year returns, and allows CalPERS to meet its current and future obligations for retirees.

Stocks led the way, with a 19.0% increase, followed by private equity at 13.6% and real estate at 11.2%. Income-generating properties — such as office, industrial and retail – accounted for much of the gains in real estate.

“When things got rough, we didn’t panic,” says Joe Dear, chief investment officer for CalPERS. “We stuck with our exposure to growth assets and applied the lessons we learned from the past. The numbers show is that our approach is working.”

CalPERS assets topped $257.8 billion at the end of June.

“CalPERS is a long-term investor and we try to not focus too much on one year of performance,” says Henry Jones, chairman of the CalPERS Investment Committee. “But, obviously, 12% is a great number and we’re pleased with the performance.”

CalPERS is the nation’s largest pension fund, administering benefits for 1.6 million current and retired public workers.