The California Public Employees’ Retirement System (CalPERS) reported an 11.3% return on its private equity portfolio in 2024, underscoring early success in its $92bn strategic overhaul of the asset class.

The performance outpaced the State Street Private Equity Index and marks a key milestone in a transformation spearheaded by Anton Orlich, Managing Investment Director for Private Equity. “Our private equity performance ranks at the top of our peer group over both one- and three-year horizons,” Orlich said. “It’s a leading indicator that the strategy is working.”

Since initiating the pivot in late 2022, CalPERS has boosted its private equity allocation from $50bn to over $92bn. The fund has already committed $14.6bn in the first nine months of its 2024-2025 fiscal year, putting it on pace to exceed its $15.5bn annual target.

Private equity now accounts for 17.9% of CalPERS’ total assets, above its 17% policy benchmark and approaching its 22% ceiling. The shift includes a notable reduction in large-cap buyouts, now comprising less than 50% of new capital deployed, and a sharp rise in venture and growth equity, which represented 43% of new commitments in fiscal 2023–24, up from 9% in 2021.

The fund has also strengthened its secondaries programme, executing several billion dollars in deals annually to diversify across vintages.

Despite broader market challenges, including muted distributions and delayed exits, CalPERS continues to scale its presence in private equity. In 2024, the fund recorded $21.7bn in capital calls against $9.6bn in distributions.

“We believe this is an attractive entry point into a strong secular growth story,” Orlich noted.

Source: Wall Street Journal 

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