CalPERS Has Paid Private-Equity Firms $3.4B Since 1990
CalPERS and other pension funds rely on potential returns from private equity investments to help finance benefits for current and future retirees (Starkman, Los Angeles Times, 11/25).
Details of Announcement
According to the Times/Chronicle, the announcement marked the first time that CalPERS has disclosed the details of profit earned from private equity investments (New York Times/San Francisco Chronicle, 11/25).
In the announcement, CalPERS also emphasized that it has earned $24.2 billion in net profit from private-equity firms since 1990.
Officials said such a performance has helped make up for high risk, complexity and costs in the private-equity sector. However, some experts are questioning whether it is work the risk.
David Crane, a public policy lecturer at Stanford University, said, "Returns from [private equity] investments need to be much higher than returns on assets not bearing similar risks and especially to justify such huge fees." However, he said, "From what I read ... about CalPERS' returns on private equity, it's hard to see that being the case" (Los Angeles Times, 11/25).
Push for Transparency
Meanwhile, the announcement comes as pension funds are seeking more transparency amid criticism of growing deficits and low performances.
CalPERS' disclosure could help increase transparency among private-equity firms, the Times/Chronicle reports.
Henry Jones, vice president of CalPERS' board and chair of its investment committee, in a statement said, "Private equity is a complicated asset class, and the board and investment office staff will now have even more insight into our program" (New York Times/San Francisco Chronicle, 11/25).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.