CalPERS’ Investments Underperformed in 2009

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Heavy losses in real estate holdings battered 2009 investment returns at California’s giant public pension fund, although the portfolio overall rose in value for the year.

The California Public Employees’ Retirement System earned an 11.8 percent return on its portfolio as global stock markets recovered from the collapse of 2008, the fund said Tuesday. The portfolio had dived 27.1 percent in 2008.

But the gain for 2009 was far below CalPERS’ internal benchmark of 21.2 percent, which is based on the performance of broad indexes of investments similar to what the fund owns. CalPERS said its real estate holdings plunged 47.5 percent for the year, compared with a 15.4 percent drop for its benchmark index of property investment returns.

“That’s massive underperformance,” said Edward Siedle, an analyst with Benchmark Financial Services Inc., a boutique investment consulting firm in Ocean Ridge, Fla. “There’s no justification for that.”

• Read the full Los Angeles Times story.

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