Calpers Tops $260 Billion as It Recoups $95 Billion Loss but still short $87 billion, or about 26 percent, of meeting its long-term commitments, and has had to ask the state and struggling cities to contribute more

Calpers Tops $260 Billion as It Recoups $95 Billion Loss

The California Public Employees’ Retirement System reached a market value of $260.8 billion in assets, surpassing the high set before the global financial crisis wiped out more than a third of its wealth.

The largest U.S. pension, with half of its money in equities, passed its pre-recession high of $260.6 billion on Oct. 31, 2007, according to a posting today on its website. The fund returned 13 percent in 2012, about the same gain as the Standard & Poor’s 500-stock index.

“The fund is stabilizing and the lessons we’ve applied from the past are paying off,” Chief Investment Officer Joe Dear said by e-mail. “But as remarkable as this number is, we are long-term investors and try to not get too excited when things are good or too discouraged when things are bad.”

Calpers isn’t alone in seeing gains. The 100 largest public pensions in the U.S. had $2.9 trillion in assets in the fourth quarter of 2007, according to U.S. Census Bureau data. That dropped to $2 trillion in 2009 and rebounded to almost $2.8 trillion as of Sept. 30. Even with its gains, the Sacramento-based pension is still short $87 billion, or about 26 percent, of meeting its long-term commitments, and has had to ask the state and struggling cities to contribute more.Calpers’s value was already in decline when Lehman Brothers Holdings Inc. went bankrupt in September 2008, leading to a panic that wiped out more than $6 trillion in U.S. stock-market value in about six months. By 2009, Calpers’s value had plummeted to $164.7 billion.

Equities Climb

Since then, the pension fund has benefited from the stock market’s recovery after the S&P 500 Index (SPX) touched a 12-year low in March 2009. The benchmark gauge of U.S. equities climbed more than 13 percent last year and has more than doubled since its low.

Apart from stocks, Calpers invested about 16 percent of its money in bonds as of Jan. 31, 13 percent in private equity, 8 percent in real estate, 4 percent in cash-equivalents, 4 percent in inflation-linked holdings such as commodities and 1 percent in forest land and infrastructure such as airports and power plants.

The state and local governments paid $7.8 billion to the fund in the last fiscal year, almost four times more than a decade earlier.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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