CalPERS Investments Up 20 Percent For Fiscal Year

The California Public Employees' Retirement System, known as CalPERS, has reported its best earnings in 14 years. CalPERS is the nation's largest public pension system and provides benefits to about 1.6 million state and local employees, retirees and their families.

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STEVE INSKEEP, host:

A giant pension fund has earned a giant return. CalPERS is the name of the California state agency that manages hundreds of billions of dollars in pension fund investments for state employees, and it just posted its biggest annual return in 14 years.

NPR's Nina Gregory reports.

NINA GREGORY: CalPERS is the nation's largest public pension system. It provides benefits to over 1.6 million state and local employees, retirees and their families. To make sure it can make good on all its promises, the fund has a target investment return of 7.75 percent a year. But for fiscal year 2010, it nearly tripled that and made just under 21 percent. CalPERS made that by sticking with the right stocks.

Mr. JOE DEAR (Chief Investment Officer, CalPERS): Stocks returned over 30 percent in the past year.

GREGORY: That's Joe Dear. He's the fund's chief investment officer. After a few brutal years for the fund - it lost 24 percent in 2009 - Dear explains that CalPERS invests for the long term.

Mr. DEAR: The long horizon allows the investor to know that even when we have a bad year, that as equities go down a lot, we have the staying power, the liquidity, the cash to ride through those downturns and keep our exposure so that when they return to their long-term historical performance, we're there to get that, too.

GREGORY: Though it's the second year in a row the fund has exceeded its earnings target, Dear says CalPERS should not assume this level of earnings will be sustained.

Nina Gregory, NPR News.

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