The State Worker

Investment shift costs CalPERS $900 million in potential gains

CalPERS disclosed on Monday that it has missed about $900 million in potential revenue since it moved to a reduced-risk portfolio in September.
CalPERS disclosed on Monday that it has missed about $900 million in potential revenue since it moved to a reduced-risk portfolio in September. Sacramento Bee file

A shift away from stocks and private equity just before the presidential election has caused CalPERS to miss out on about $900 million in revenue since September.

CalPERS Chief Investment Officer Ted Eliopoulos disclosed the number at a Board of Administration meeting on Monday in a presentation describing how a temporary shift in assets has played out.

The fund moved some of its investments away from stocks and private equity last fall, anticipating a period of market volatility. It has missed some of the broad market gains that have unfolded in recent months.

“Of course, we like to look at much longer time periods for them to be meaningful,” Eliopoulos said.

The board is expected to reconsider the portfolio in July 2018.

CalPERS in December voted to gradually lower its investment forecast, shaving its target from 7.5 percent to 7 percent. The decision reflected its expectation that it would see lower market returns for some time.

Board member Theresa Taylor questioned whether CalPERS could devise a different policy that might allow it act faster if trends change.

“I just want to make sure you are exploring all options so we are not leaving money on the table,” she said. “I know we are risk adverse and I get that but I also think that we leave ourselves open to not being able to do what we could be doing.”

Adam Ashton: 916-321-1063, @Adam_Ashton. Sign up for state worker news alerts at sacbee.com/newsletters.

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