Monday, the California Public Employees’ Retirement System (CalPERS) reported a 1% return on investments for the 12 months that ended June 30. Its assets totaled more than $233 billion at the end of the fiscal year.
The Sacramento Bee suggested that these results would likely catch the state legislature’s attention. “Gov. Jerry Brown and Republican lawmakers have been pushing to overhaul the public pension system to reduce costs.” The governor’s office has vowed to push some reforms through the legislature this year.
CalPERS attributed the small gain to improved performance of CalPERS real estate investments, particularly those in income-generating properties like office, industrial and retail assets, where the return was more than 15%.
However, investments in equities dragged down overall results. Joe Dear, the CalPERS chief investment officer, said: “The last twelve months were a challenging period for all investors as the ongoing European debt crisis and slowing global economic growth increased market volatility and reduced equity returns.”
CalPERS 1% return fell short of its benchmark that returned 1.7%, and it is below the fund’s discount rate of 7.5%. The fund’s board lowered that rate in March from 7.75% on concerns about the potential financial strain that it would impose on cash-strapped state agencies and local governments.
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