CA state retirement fund lost 71% of $468M put in clean energy, won’t say how

 The California Public Employees' Retirement System (CalPERS) faced significant financial losses, and state records show a 71% decline in its investment within a clean energy and technology private equity fund. These losses raise concerns about the management of retirement funds entrusted to CalPERS by state employees and California taxpayers.

• Investment Losses: CalPERS invested $468 million in the Clean Energy & Technology Fund (CETF) starting in 2007. As of March 31, 2025, the value of this investment dropped to $138 million, amounting to a loss of over $330 million.

• Pension Funding Issues: CalPERS reports it is only 79% funded, placing financial responsibility on California taxpayers for the remaining 21%. The estimated total pension shortfall exceeds $180 billion.

• Performance Comparison: In the 2024-2025 fiscal year, CalPERS reported overall returns of 11.6% from its investments. While private equity earned 14.3% and public equity earned 16.8%, public finance expert Marc Joffe questioned the value of private equity, suggesting it complicates investments relative to more straightforward public market options.

• Fees and Transparency: The private equity investments incurred fees of at least $22 million. CalPERS defends its private equity strategy, claiming past management made poor decisions, while also emphasizing efforts to lower fees and diversify investments.

• Investment Strategy Changes: CalPERS increased its private equity investment target from 7% to 17% in recent years, citing the historical performance of these assets but noted that valuations are often based on estimates, creating transparency concerns.

• Public Records Request: The Center Square filed a request for further transparency regarding the fund's losses, but CalPERS limited disclosure due to state law exemptions for alternative investments.

• Expert Opinions: Financial experts argue that private equity is too risky and costly for pension funds. David Loy from the First Amendment Coalition highlighted the lack of public visibility into how pension funds, which impact taxpayers, are managed.

• Hypothetical Returns: Had CalPERS's $468 million investment in CETF been placed in an S&P 500 index fund instead, it could have potentially grown to about $3 billion, illustrating the opportunity costs involved.

• Comparative Risks: Effective asset management emphasizes low risk and consistent returns rather than focusing solely on high potential returns. CalPERS's CETF experience contradicts this approach, resulting in substantial financial losses.

The substantial loss in CalPERS' clean energy and technology investment underscores the challenges of private equity and raises critical questions about transparency and management strategies for pension funds. The financial burden of these losses primarily affects California taxpayers and employees who depend on CalPERS for secure retirement plans. 

https://www.thecentersquare.com/california/article_55faf935-81b3-457e-9cb3-006fd895dbdf.html