The California Public Employees’ Retirement System’s (CalPERS) public and private equity portfolios powered the pension fund to its strongest investment performance in five years, with listed equities returning 24.1% and private equity generating 17% during fiscal 2025-26.
Both asset classes helped lift the $637.1B pension fund to a preliminary net return of 14.8% for the year ended June 30, exceeding last year’s 11.6% return, according to its latest annual report.
The 17% private equity return reflects the continued evolution of a strategy introduced in 2022 by Anton Orlich, CalPERS’ deputy chief investment officer for private markets. The strategy emphasizes stronger manager selection, lower-cost investment structures and broader diversification across venture capital, growth equity and middle-market buyouts.
The results come as CalPERS begins implementing its Total Portfolio Approach, approved by the board in November 2025 and launched earlier this year. The framework gives investment staff greater flexibility to allocate capital based on opportunities that benefit the overall portfolio rather than maintaining rigid asset-class allocations.
“Our total portfolio approach will mean we will be focusing more on the best investments for the whole portfolio level, rather than just for any individual asset class,” Stephen Gilmore, CalPERS’ chief investment officer, said in a press release. “We will regularly and publicly measure the performance of our active approach compared with a standard reference portfolio of 75% global equities and 25% U.S. Treasury bonds, ensuring that we are really delivering value for our members.”
The strong investment performance also strengthened the pension system’s overall financial position. Private debt returned 11%, real assets gained 6.3% and fixed income returned 5.9%. CalPERS’ funded ratio improved to 85% as of June 30 from 79% a year earlier. When Chief Executive Officer Marcie Frost joined the organization in 2016, the fund was 68% funded.
“Our team has maintained a disciplined approach to building the health of the pension system, and our improved funded status shows this effort is paying off for our 2.4 million members,” said Frost. “We will maintain this focus as we build toward full funding, resisting external distractions that could increase costs or force us to forgo investment returns.”
Over longer periods, CalPERS generated preliminary annualized returns of 6.83% over five years, 8.57% over 10 years and 6.81% over 20 years.
The preliminary results will be finalized following a review by CalPERS investment staff and external experts in the coming months. Once finalized, the return will determine employer contribution rates and could prompt the board to consider lowering the fund’s 6.8% discount rate under its Funding Risk Mitigation Policy when it meets in September.
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