Calpers plans to expand its investment capital allocations

California’s giant public pension fund is looking to increase its exposure to venture capital in the coming months, despite a swoon in the startup market and lackluster performance recently by the fund’s venture capital portfolio.

The California Public Employees Retirement System, or CalPERS, manages approximately $457 billion in assets as of April 2023. Anton Urlich, the pension fund’s private equity investment director, notes that CalPERS is eager to step into the domestic funding vacuum and become the largest partner. Ltd. after a rough year in the proprietary technology markets.

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After a record high in 2021, exit activity among venture-backed companies fell 90% last year, according to the National Venture Capital Association, as the IPO market froze and technology stocks collapsed. While risk investing remains historically high, it is down 30% from the prior year.

in Power point Orlich will present to the investment committee CalPERS that are now available on the fund’s website, and the investment manager says the pension fund should “become the solutions provider of choice in a period when some potential partners are backing away from commitments.”

Urlich said CalPERS’ private equity investment strategy has been “inconsistent.” He called it a “lost decade,” because the company missed out on an extended bull market and vintage years that would yield “solid investment returns.”

Between 2000 and 2020, CalPERS underperformed the enterprise market, according to a PitchBook report, with annual returns of 0.49%.

Venture makes up just 1% of CalPERS’ $55 billion private equity portfolio, and represents about $758 million of net asset value. Last year, while CalPERS’ private equity investment portfolio returned −4.7%, CalPERS’ investment portfolio performed by 24.8%.

Pension fund investments have skewed toward the public market and so-called “real estate assets,” such as property.

But just because CalPERS wants to boost activity in the adventure world doesn’t mean its money will be welcomed by all involved.

Unlike many large private LPs who can keep their relationships secret, CalPERS is required to disclose its investments and publish its performance. In December 2022, for example, CalPERS committed $600 million to two TPG mutual funds.

However, Ulrich says the funding environment will give CalPERS an advantage in finding opportunities “with managers that have been historically hard to reach.”

He watchesPension fund projects investments

Pension funds are pushing into venture capital as big investors look to get back into technology


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