Investments

Myths vs. Facts

Fact:
While bonds have out-performed stocks in this decade, short-term thinking is never right for a pension fund with a well-diversified portfolio. In fact, stocks beat bonds by 5 percent in the 20th century.

Fact:
This year, we reduced our public stock allocation not because we have lost confidence in stocks, but in part to make more assets available for private equity. We believe private equity will outperform stock earnings by at least 3 percentage points. Private equity is the strongest long-term performance of an asset class in our portfolio.

Fact:
Our 77-year investment records show that CalPERS portfolio gains significantly increased when the Board removed restrictions on global stock investing in the mid-1960s. Since then, annual portfolio growth increased sharply with the notable exceptions of the two recessions of the current decade.