CalPERS’ Cites Private Equity as Best Performer, Indispensable Part of Portfolio

CalPERS’ Chief Investment Officer Theodore Eliopoulos said on Monday that private equity is CalPERS’ best performing long-term asset class, offering proof in numbers. For the five years that ended on June 30, CalPERS’ private equity portfolio returned an annualized 14.4 percent, compared with public equities’ 12.9 percent. And over the 10-year horizon, the difference is even greater, with private equity returning 11.9 percent versus 6.6 percent for public equities.

High returns from private equity mean fewer taxpayer dollars are needed to fund pension shortfalls. In fact, a CalPERS investment executive said a hypothetical scenario that eliminated private equity from the 2013 portfolio would have required the fund either to increase volatility substantially or reduce the expected return by 0.25 percent.

In its annual ranking of large public pension funds, the Private Equity Growth Capital Council (PEGCC) found in 2014 that private equity delivered a 12.3 percent annualized return to the median public pension over the last 10 years, more than any other asset class. The PEGCC will release an updated pension ranking in early December 2015.

With steady performance year after year, the partnership between pension plans and private equity will continue to strengthen, helping secure peace of mind for all Americans who depend on it.

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