CalPERS set up funds mandated to invest in California companies to help California job creation. How's that working out for them?
CalPERS' investment committee urged staff not to move ahead with plans to end the pension fund's $1.035 billion private equity program that targets California-based companies.
Staff at the $237.5 billion California Public Employees' Retirement System, Sacramento, has called for a five-year wind-down of the program and did not back off that recommendation on Monday, although a panel of investment staff members led by Real Desrochers, senior portfolio officer, private equity, said they would work to develop a new plan for in-state investments.
The most recent commitment in the program, $560 million to a Hamilton Lane fund of funds in 2006, has shown an internal rate of return of 0.86% as of Dec. 31 compared to its benchmark's 6.9% return.
Another $475 million committed to 10 managers in 2001 has shown an annualized -6.4% IRR as of Dec. 31 when the performance of one of the funds — the GCP California Fund, with a 94% IRR — was excluded, according to an analysis of the California-only private equity program presented to the board.
And let's not forget CalPERS' most hilarious California investment of all: putting a billion dollars into leveraged scrub land outside of Los Angeles at the peak of the housing bubble in the infamous LandSource deal.
Here's a tip for you geniuses at CalPERS: don't invest in a failed state that just decided to borrow money to build a $6 billion train to nowhere when it can't even balance the annual budget much less keep up with mushrooming pension liabilities.