The California Public Employees’ Retirement System (CalPERS), generated a 14.8% investment return for the fiscal year ended 30 June 2026, comfortably exceeding its long-term annual target of 6.8%, with strong performances from public markets and private equity, according to a report by Bloomberg.
The result increased the fund’s assets to $637.1bn and improved its funded status to 85%, up from 79% a year earlier, according to the pension fund.
Private equity, one of the portfolio’s strongest-performing asset classes, returned 17% over the period, second only to public equities, which delivered a 24.1% gain. Elsewhere, private debt generated returns of 11%, real assets returned 6.3%, and fixed income rose 5.9%.
Speaking at a board meeting, CalPERS chief executive Marcie Frost said the improved funding position represented significant progress but stressed that achieving full funding remains the organisation’s primary objective.
The results come as the pension fund embarks on a significant overhaul of its investment framework through the adoption of a total portfolio approach (TPA), becoming the first US public pension plan to implement the strategy.
Under the new model, investment decisions will no longer be driven by fixed allocations to individual asset classes such as equities, bonds, private equity and real estate. Instead, investment teams will work across the entire portfolio to pursue the most attractive risk-adjusted opportunities, with greater flexibility in capital allocation.
As part of the transition, CalPERS has introduced a new reference portfolio comprising 75% equities and 25% fixed income, replacing its previous asset allocation framework.
Supporters of the TPA model argue that it should improve portfolio efficiency and allow the pension fund to respond more dynamically to changing market conditions while enhancing long-term returns.
