California pension fund records first loss since Great Recession

California’s public employee retirement system reported a loss of more than 6% in the previous fiscal year, its first negative return on investment since the Great Recession, the state pension fund said Wednesday.

At the close of the 2021-22 fiscal year, which ended June 30, the fund stood at $440 billion, a loss of nearly $30 billion from the previous year, when CalPERS reported a positive return of 21.3% to bring the fund’s total to $469 billion. .

“Tumultuous global markets played a role in CalPERS’ first loss since the 2009 global financial crisis,” the organization said in a statement Wednesday.

CalPERS, which provides retirement benefits to more than 2 million members with the largest public pension fund in the United States, reported that equity investments fell 13.1% in value. Fixed income investments, such as bonds, fell 14.5%. These “public market investments” represent nearly 80% of the fund.

Private equity investments and real assets in CalPERS, however, gained more than 20% each, although these numbers are as of March 31.

“Our traditional diversification strategies have been less effective than expected as we have seen public equities and fixed income assets fall in tandem,” CalPERS Chief Investment Officer Nicole Musicco said in the release.

Due to the overall loss, the fund ended the year with 72% of the cash it needs to meet all of its financial obligations.

After a record 2020-21 fiscal year, the system was 82% funded.

The loss comes as CalPERS has sought to stabilize, two years after the abrupt resignation of former chief investment officer Ben Meng.

Dolores W. Simon