The California Public Employees’ Retirement System has seen robust performance in its private equity portfolio, the pension fund’s investment staff highlighted at its June 15 board meeting.
The asset class returned an annualized 13.5%, 12.9% and 11.8% over the past five-, 10-and 20-year periods, respectively—the highest returns of all asset classes during those periods—noted Anton Orlich, CalPERS’ deputy CIO of private markets, during the meeting. Orlich was recently promoted from his role as head of private equity.
Additionally, Orlich highlighted the private equity asset class’s 21.2% return over the one-year period that ended March 31, compared with 21.5% for public equities and 14.1% for the total fund.
CalPERS initiated a revamp of its private equity strategy beginning in November 2022, with the goal of diversifying away from large buyouts and toward middle-market buyouts, growth equity and venture capital.
Large buyouts, as a total percentage of the private equity portfolio, were reduced to 32% as of the end of March from 46% on September 30, 2022, while growth middle market buyouts decreased to 25% from 28%, growth equity grew to 32% from 18%, and venture capital rose to 6% from 2%. The pension fund relaunched its venture program in 2022 after a decade-long absence. Since the 2022 revamp, the allocation to opportunistic assets has stayed flat at 4% of the PE portfolio, and credit has fallen to 1% from 3%.
The new strategy has largely been a success, according to Orlich, as it significantly outperformed the old strategy. For example, as of June 30, 2022, CalPERS’ 10-year annualized returns ranked 55th out of 56 U.S. public pension private equity programs with at least $1 billion in assets, according to data from Nasdaq eVestment. CalPERS’ current private equity strategy has reported a 29.5% internal rate of return since inception, compared with 11.2% for the prior PE strategy, according to Orlich.
Similarly, as of December 31, 2022, CalPERS was ranked 30th among the largest U.S. private equity programs ranked by three-year time-weighted returns, but it ranked in first place as of December 1, 2025.
Not All Roses
Despite the performance improvement, CalPERS’ alternative investment program has come under scrutiny due to fees, transparency and performance. A report commissioned by the Retired Public Employees’ Association of California and prepared by Benchmark Financial Services Inc. claimed that CalPERS’ returns put it in the bottom 15% of 230 U.S. public pension funds ranked by performance.
That 250-page report also criticized the compensation of CalPERS’ staff—four CalPERS executives were paid more than $1 million per year in 2024, with another four earning more than $900,000, and 26 making between $500,000 and $900,000.
CalPERS is set to formally change its overall investment strategy and adopt a total portfolio approach on July 1, making it the first U.S. public pension fund to do so. CalPERS managed $620.8 billion in assets, as of April 30, including $120.8 billion in private equity investments.
Tags: California Public Employees’ Retirement System, CalPERS, Total Portfolio Approach
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