You may know that CalPERS manages an investment portfolio worth more than $500 billion. That’s an eye-popping amount, and it leads one to wonder what types of investments are in that portfolio.
It’s an important question for two major reasons: The money belongs to our members, and CalPERS depends on the returns from its investments to pay the largest portion of member pensions each year.
Considering how crucial these investments are to paying pensions, CalPERS is keen to make wise investing decisions.
CalPERS invests billions of dollars in a wide array of companies in the United States and across the world operating in industries such as information technology, retail, health care, energy, entertainment, and financial services.
In addition, CalPERS’ investment portfolio is further diversified through its purchase of different types of assets, like corporate stock, real estate, or bonds.
Here’s a rundown of the asset types that make up the CalPERS portfolio:
Global Equity
Publicly traded companies like Amazon or Toyota often raise money for their operations by issuing stock for investors to purchase on publicly accessible stock exchanges like the New York Stock Exchange. Purchasing stock entitles an investor to an ownership stake — equity — in a company, a share in its profits, and a say in corporate decision-making. This asset class is referred to as “global equity” as CalPERS has equity in publicly owned companies across the world.
Global Fixed Income
Companies and governments can also raise money in financial markets by selling bonds — basically an IOU — to investors. Those entities must repay the bond’s principal in full at a set point in the future and make regular interest payments — a fixed income for investors — over the life of the agreement.
Private Debt
Companies in need of money can obtain private loans made directly with investment firms that manage investor funds. The company that took on the debt will then make interest payments to investors over the life of the loan.
Private Equity
This asset class refers to a strategy in which investors partner with investment firms to purchase a company. For example, an investment firm will use investors’ money and other funds to acquire equity in a company and operate it with an aim to sell it for a profit later.
An example of a private equity strategy is venture capital, in which investment firms acquire equity in a startup company thought to have potential for massive growth. Investors hope to sell the company at a profit once and if that growth has been realized.
Real Assets
This asset class refers to investments in real estate and companies that own infrastructure that provide critical community resources like electricity or water. Investment income is generally earned through tenant rent payments and dividends — company earnings distributed to investors.
If you’re interested in learning the dollar value of each asset type within the CalPERS portfolio and other investment statistics, check out Facts at a Glance (PDF).
Lastly, the 2022-23 Annual Investment Report (PDF) provides a summary of CalPERS investments in the fiscal year that ended June 30, 2023.