 reported a preliminary net return of 9.3% for the fiscal year ending June 30){kind=link}
Sacramento, California – On its investments for the fiscal year ending June 30, 2024, the California Public Employees’ Retirement System (CalPERS) reported a strong preliminary net return of 9.3%. This result, showing an impressive return, exceeds the system’s set discount rate of 6.8%. CalPERS keeps strengthening its financial basis among changing market conditions, with assets now valued at around $502.9 billion.
The return this year shows a clear increase over the past fiscal years, which confronted economic challenges driven by world instability and market volatility. Strategic changes in the investment portfolio help to explain the rebound by matching the changing economic landscape.
“Our investing strategy was well positioned to take advantage of improving economic conditions over the past 12 months,” said CalPERS Chief Executive Officer Marcie Frost. “Meeting or exceeding our long-term investing goals is crucial for providing the retirement benefits that our 2 million members and their families are counting on.”
Comprising 41.9% of the Public Employees’ Retirement Fund (PERF), public equities investments stood out in the portfolio with an outstanding 17.5% return. With a 17% return, the private debt sector, a recent addition to the asset classes in 2022, also showed good success.
By contrast, the fixed income and private equity categories saw returns of 3.7% and 10.9%, respectively. Reflecting a negative return for the fiscal year, real assets plummeted.
Dan Bienvenue, Interim Chief Investment Officer, emphasized the strategic focus of the investment team.
“Our team remains focused on executing on our long-term investment strategy, building a diversified portfolio to navigate markets and mitigate volatility over our multi-generational investment horizon,” said Interim Chief Investment Officer Dan Bienvenue.
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Looking at the wider time frame, the preliminary total fund annualized returns for the five-year period ending June 30, 2024, were 6.6%; with a ten-year return at 6.2% and a 20-year return at 6.7%. The 30-year return rate marginally rose to 7.7%.
These preliminary numbers offer a first glance at CalPERS’ financial situation. Over the next months, the thorough analysis of the performance of the portfolio by investment and finance staff, together with outside consultants, will help to complete the fiscal year’s returns.
Once verified, these returns will be very important in deciding the contribution amounts for the State of California, school systems, and other contracting organizations for next fiscal years. Part of the CalPERS Asset Liability Management approach, this procedure takes into account factors for discount rate adjustment depending on the funding risk mitigating policy of the system, particularly in cases when investment returns surpass expectations.
This financial success not only emphasizes CalPERS’ investment plans’ robustness but also confirms its dedication to members’ financial security, therefore guaranteeing a stable and rich future for many.