The California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the US, remains firmly committed to private equity despite ongoing challenges in liquidity and exit activity across the asset class, according to a report by Bloomberg citing CEO Marcie Frost.
Speaking in an interview with Bloomberg TV, Frost reiterated the pension’s long-term strategic focus on private markets, noting that private equity has been one of CalPERS’ strongest-performing allocations over the past two decades. She emphasised the importance of partnering with top-tier GPs as the industry navigates a more difficult dealmaking environment.
Private equity distributions have slowed across the board as managers face limited exit opportunities, with M&A activity and IPO volumes remaining well below historical averages. Still, CalPERS’ private equity portfolio returned 14.3% in the most recent fiscal year – trailing public equities, which returned 16.8% – but outperforming other private market segments.
As part of its broader strategic overhaul, CalPERS has shifted emphasis toward cost-efficient structures such as co-investments and separately managed accounts. According to Frost, this approach has contributed to a 10% reduction in private equity-related fees over the past two and a half years.
The pension’s current target allocation to private equity stands at 17%, with an additional 8% allocated to private credit – both increased last year as CalPERS trimmed exposure to listed equities and fixed income. Frost attributed the fund’s ability to deploy capital to its strong liquidity position, which she said differentiates CalPERS from many peers with tighter funding constraints.
