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Calpers Recoups Some of Its Record Losses

Date: Friday, July 16, 2010
Author: Tess Stynes, The Wall Street Journal

The California Public Employees' Retirement System reported a preliminary 11.4% investment-performance gain for the fiscal year ended in June, following record prior-year losses in the wake of the financial crisis.

The nation's largest public pension fund by assets reported a 23% slump in the year ended June 30, 2009, marking its worst year ever. Some of the biggest hits were from private or alternative investments like real estate. Calpers has since begun pulling back on such exposure.

The pension system's asset rose $19 billion during the latest year to $200 billion. The period's investment-return rebound is in excess of Calpers's annual growth target of 7.75%.

Chief Investment Officer Joe Dear said all of its investment sectors, except for real estate, saw gains the past year amid the improved stock market and market liquidity. Real-estate assets declined 37% amid write-offs and deleveraging, with the loss representing 1.3% of the fund's value.

Conversely, asset values rose nearly 20% for fixed-income investments, 31% for private equity and 14% for stocks, said Calpers.

Mr. Dear noted continuing restructuring in the real-estate segment, saying, "We're moving back into core properties and accepting managers in whom we have confidence. We're letting go underperforming managers and looking for the best possible deals as they become available in a still-sluggish market."

Calpers administers retirement benefits for 1.6 million people and their families.

Write to Tess Stynes at tess.stynes@dowjones.com