Key Takeaways
- • CalPERS allocated nearly $20 billion across equity, fixed income, and alternatives in the second quarter of 2025, according to materials prepared for its November 17 investment committee meeting.
- • CalPERS' private equity portfolio delivered a 17.8% return in 2025, contributing to the total fund's 15.4% annual return, demonstrating the success of strategy overhauls implemented since late 2022.
- • Anton Orlich, managing investment director for private equity, attributes improved PE performance to a "tale of two portfolios" model—where newer, outperforming vintages gradually overcome older underperforming legacy holdings.
- • CalPERS' private equity turnaround under Orlich's leadership emphasizes three strategic pillars: deep relationships with top-tier managers, expanded co-investment programs, and diversified strategy exposure including growth equity, venture capital, middle-market buyouts, and secondaries.
- • The pension fund has formally expanded its venture program and growth equity exposure, fundamentally transforming its segment mix as part of a broader shift toward higher-allocation private markets investing.
Summary
The California Public Employees' Retirement System deployed nearly $20 billion across asset classes during the second quarter of 2025, spanning equity, fixed income, and alternative investments. The allocation underscores CalPERS' continued commitment to diversifying its $220 billion portfolio across multiple asset categories ahead of its November 17 investment committee meeting.
CalPERS' private equity performance in 2025 reflects a strategic pivot implemented under Anton Orlich, who rejoined the pension fund in late 2022 as managing investment director for private equity. His appointment by CEO Marcie Frost marked the beginning of a comprehensive overhaul of CalPERS' alternative investment approach. The blended private equity portfolio—combining mature legacy holdings with newly deployed capital—generated a 17.8% return in 2025, a performance that helped drive the total fund to a 15.4% annual return. According to Orlich, the improving returns demonstrate how newer investment vintages, deployed under the revised strategy, are gradually offsetting underperformance from older positions built under traditional approaches.
Orlich's strategy diverges from CalPERS' historical model in three material ways. First, the program prioritizes forging deep, long-term relationships with top-tier, high-conviction managers rather than pursuing broad-based manager relationships. Second, CalPERS has significantly expanded its co-investment activities, allowing the fund to deploy capital alongside lead investors while improving cost efficiency and alignment. Third, the fund has broadened its strategy mix beyond traditional large-cap buyouts to include growth equity, venture capital, middle-market buyouts, and secondary investments. The pension formally established a dedicated venture capital program and substantially increased growth equity exposure, fundamentally reshaping its private markets segment composition.
Orlich's background—including prior leadership of alternative investments at Kaiser Permanente, where he developed and tested private markets models aligned with institutional liquidity requirements—informs CalPERS' approach to managing the tension between illiquid private market commitments and annual benefit payment obligations. His framework acknowledges the dual nature of CalPERS' portfolio: established positions from the traditional era, which continue to mature and underperform relative to current benchmarks, operating alongside newer vintages that reflect evolved investment methodology and manager selection criteria.
The results validate CalPERS' strategic repositioning. The 17.8% private equity return in 2025 positions the pension fund among top-quartile institutional investors and supports the broader institutional case for increased private markets allocation. This performance trajectory suggests that CalPERS' commitment to private markets—which has expanded from historical levels toward 40% of total plan assets under revised allocation frameworks—is delivering measurable value as the newer portfolio gradually comes to dominate composition and returns.
CalPERS' private equity performance in 2025 reflects a strategic pivot implemented under Anton Orlich, who rejoined the pension fund in late 2022 as managing investment director for private equity. His appointment by CEO Marcie Frost marked the beginning of a comprehensive overhaul of CalPERS' alternative investment approach. The blended private equity portfolio—combining mature legacy holdings with newly deployed capital—generated a 17.8% return in 2025, a performance that helped drive the total fund to a 15.4% annual return. According to Orlich, the improving returns demonstrate how newer investment vintages, deployed under the revised strategy, are gradually offsetting underperformance from older positions built under traditional approaches.
Orlich's strategy diverges from CalPERS' historical model in three material ways. First, the program prioritizes forging deep, long-term relationships with top-tier, high-conviction managers rather than pursuing broad-based manager relationships. Second, CalPERS has significantly expanded its co-investment activities, allowing the fund to deploy capital alongside lead investors while improving cost efficiency and alignment. Third, the fund has broadened its strategy mix beyond traditional large-cap buyouts to include growth equity, venture capital, middle-market buyouts, and secondary investments. The pension formally established a dedicated venture capital program and substantially increased growth equity exposure, fundamentally reshaping its private markets segment composition.
Orlich's background—including prior leadership of alternative investments at Kaiser Permanente, where he developed and tested private markets models aligned with institutional liquidity requirements—informs CalPERS' approach to managing the tension between illiquid private market commitments and annual benefit payment obligations. His framework acknowledges the dual nature of CalPERS' portfolio: established positions from the traditional era, which continue to mature and underperform relative to current benchmarks, operating alongside newer vintages that reflect evolved investment methodology and manager selection criteria.
The results validate CalPERS' strategic repositioning. The 17.8% private equity return in 2025 positions the pension fund among top-quartile institutional investors and supports the broader institutional case for increased private markets allocation. This performance trajectory suggests that CalPERS' commitment to private markets—which has expanded from historical levels toward 40% of total plan assets under revised allocation frameworks—is delivering measurable value as the newer portfolio gradually comes to dominate composition and returns.
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