Pension funds are beginning to report 2009 performance, and the first take on the numbers would indicate that we're skating back from the brink.
Losses in virtually every asset class during the 2008 market meltdown left many funds woefully underfunded at the beginning of last year, and the first few months of 2009 added to the damage.
But the bellwether $203-billion (U.S.) California Public Employees' Retirement System (better known as CalPERS) announced Wednesday that it posted an 11.8 per cent return on investments in 2009. CalPERS is among the first of the major funds to report - the public sector Canadian funds will reveal all starting in February - and there's a sense that this solid performance will be typical of large funds.
In an upbeat note, CalPERS chief investment officer Joe Dear said in a press release: "We sharpened our investment focus, looking at our portfolio from top to bottom. Now we're in a strong position to take full advantage of any financial upturn in 2010."
CalPERS' global equity portfolio led the way in 2009, rising 35 per cent on the back of strong returns from emerging market investments. The fixed income portfolio rose 14 per cent. The fund had a 5 per cent return on inflation-linked assets, which include infrastructure and timber lands.
CalPERS said two asset classes - real estate and private equity - dropped through the fist nine months of 2009 - these sectors report results three months behind the rest of the portfolio. The real estate portfolio turned in a dismal 47 per cent decline, while the private equity portfolio was off 6 per cent.