CalSTRS, CalPERS sufter losses over past year

Jon Ortiz

Jul. 18, 2008 (McClatchy-Tribune Regional News delivered by Newstex) -- The state's two big public pension funds announced today that they lost money during their last fiscal year.

The California Public Employees' Retirement System, with $239 billion in assets, posted a 2.4 percent loss for year that ended June 30. The California State Teachers' Retirement System, with $162 billion in assets, lost 3.7 percent. Public pensions on average have loss 5 percent on investments, according to Merrill Lynch (NYSE:MER) (OOTC:MERIZ) analysts.

Both funds blamed the poor returns on the equity markets and the weak economy. "It was difficult for any investor to make positive returns in stocks this past year, but we realized gains in other areas, ending the year in good financial shape," said Anne Stausboll, CalPERS Interim Chief Investment Officer, in a press statement.

CalPERS and CalSTRS both credited their diverse investments for stemming losses.

"Despite troubled economic times, especially in the equities markets, our portfolio continues to provide long-term stability for our members' financial futures," CalSTRS Chief Executive Jack Ehnes said in a press release.

Stock investments were the weakest link for both funds. CalPERS lost an estimated at 10.7 percent on equities, blunting its gains in private equity (19.6 percent), real estate (8.1 percent) and global fixed income (7.7 percent). The fund's new inflation-linked asset investments, which include infrastructure and commodities, gained 22.9 percent, but the 9-month-old program is still a very small part of CalPERS' portfolio.

CalSTRS lost 13.4 percent on its U.S. stock portfolio and 5.8 percent on foreign stocks, offsetting gains of about 11.5 percent in real-estate and private-equity portfolios. Fixed income gained 6.1 percent.

CalPERS is the nation's largest public pension fund with 1.5 million publicly employed workers, retirees and their families. CalSTRS is the nation's second-largest public pension fund providing benefits to 813,000 current and retired educators and their families.

Newstex ID: KRTB-0178-26775124