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CalPERS’ inflation-linked investments return 7.8%

The asset class, which includes infrastructure, beat its benchmark by more than 2%, contributing to an overall return of 12.5% for the year. The $226bn pension’s private equity portfolio returned 21.5%.

The California Public Employees’ Retirement System’s Inflation-Linked Asset Class, which includes infrastructure, returned 7.8 percent in 2010, topping its benchmark by more than 2 percentage points, the $226 billion pension said in a statement.

Detailed performance figures for the pension’s infrastructure portfolio were not available but will be disclosed in a quarterly report next month, a spokesperson said.

CalPERS

As of 31 October 2010 CalPERS had about $870 million invested in infrastructure, representing an actual allocation of .4 percent as of that date, according to the spokesperson. The pension’s target for infrastructure is 1.5 percent.

The inflation-linked asset class performance added to the pension’s overall positive return of 12.5 percent for the year. That return helped CalPERS’ fund gain more than $65 billion since the low point in March 2009, when the fund stood at $160 billion.

CalPERS’ $48 billion private equity portfolio was the pension’s star performer in 2010, generating returns of 21.5 percent, crushing its benchmark and topping every other asset class.

Just down the road at the California State Teachers’ Retirement System, its $38 billion private equity programme was also outshining other asset classes, generating 16.9 percent returns at the end of 2010.

CalSTRS declared an overall return of 12.7 percent for the $146 billion fund in 2010, a market value the fund has not achieved since 2008.

Like CalPERS, which carved out 5 percent of its fund for its inflation-linked asset class, CalSTRS has a 5 percent allocation to an absolute return asset class. The asset class was created using a permanent 5 percent reduction in equities. Infrastructure is targeted to fill half the 5 percent allocation.

CalSTRS did not provide performance data for the absolute return asset class and has yet to make any infrastructure investments, according to a spokesperson. A portfolio manager for infrastructure, Diloshini Seneviratne, was appointed last year and the pension is currently in the process of selecting a consultant for the asset class.

The pension’s first infrastructure deals could happen in 2011, the spokesperson added.