July 18, 2012: Private Equity International reports that the two California pension behemoths CalPERS and CalSTERS (public employees and teachers respectively) had lackluster results in their most recent fiscal year ended March 31, 2012. In both cases, though, the pension funds private equity portfolios posted encouraging results. The overall returns for CalPERS and CalSTERS were were 1.0% and 1.7% respectively, but private equity results were up 5.4% and 5.9%.

QUICK ANALYSIS: Much has been written in recent months about Private Equity-as a broad category-failing to achieve the remarkable results of past decades.  However, the fact that the investment class was up (albeit in single digits) in a year which included the European crisis during much of the second half of 2011, underscores that big investors are unlikely to be losing faith in these multi-year type of investments. We note that PEI reports that 15% of CalPERS $233bn of investments is allocated to private equity.  The results also lead us to wonder if CalSTERS, as the article suggests, has or will follow-up with its previously announced intention to sell a portion of its private equity partnership positions in the illiquid secondary market, and potentially lose out on gains down the road.