California pension fund reports $29-billion loss, first since Great Recession, amid market turmoil

The California Public Employees’ Retirement System reported a loss of more than 6% last fiscal year, its first negative investment return since the Great Recession, the state pension fund said Wednesday.

At the close of the 2021-22 fiscal year, which ended June 30, the fund stood at $440 billion, a loss of nearly $30 billion from the previous year, when CalPERS reported a positive 21.3% return to bring the fund’s total to $469 billion.

“Tumultuous global markets played a role in CalPERS’ first loss since the global financial crisis of 2009,” the organization said Wednesday in a news release.

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CalPERS, which provides retirement benefits to more than 2 million members with the largest public pension fund in the U.S., reported investments in stocks dropped 13.1% in value. Fixed-income investments, such as bonds, fell 14.5%. These “public market investments” make up nearly 80% of the fund.

CalPERS’ private equity investments and real assets, however, each gained more than 20%, although those figures were as of March 31.

“Our traditional diversification strategies were less effective than expected, as we saw both public equity and fixed income assets fall in tandem,” CalPERS Chief Investment Officer Nicole Musicco said in the release.

As a result of the overall loss, the fund ended the fiscal year with 72% of the money it needs to meet all its financial obligations.

After a banner 2020-21 fiscal year, the system was 82% funded.

The loss comes as CalPERS has sought to stabilize itself two years after previous investment chief Ben Meng stepped down abruptly.