Key Takeaways
- • Calpers reduced its direct holdings in the seven largest US technology stocks (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla) by 26% during the first half of 2026, according to a Financial Times report.
- • The $640bn pension fund is redirecting capital toward private equity, with venture capital and growth equity accounting for a disproportionate share of new commitments since its 2022 strategy overhaul.
- • Deputy chief investment officer Anton Orlich argued private companies offer more attractive valuations than listed peers and reduce exposure to a potential correction in listed tech.
- • The reallocation comes as the S&P 500 returned roughly 65% over the three years to March 2026, versus 24% for a Cambridge Associates US private equity index, and as the Nasdaq 100 fell 7.7% from its early October peak.
- • Critics question valuations of privately held AI companies including OpenAI and Anthropic and whether venture exposure truly diversifies away from technology.
Summary
The California Public Employees' Retirement System (Calpers) has cut its combined direct shareholdings in the seven largest US technology stocks by 26% during the first half of 2026, while increasing its allocation to private equity, according to a report by the Financial Times. The $640bn pension fund is seeking to diversify its portfolio amid concerns over elevated public market valuations.
Anton Orlich, Calpers' deputy chief investment officer, reportedly said the strategy would reduce concentration risk while providing exposure to privately held companies trading at more attractive valuations than their listed counterparts. Orlich also argued that private equity valuations offered opportunities to generate returns while reducing exposure to a potential correction in listed technology stocks. He identified strategic acquisitions as an alternative exit route for venture capital and growth equity investments, given a challenging IPO market.
Venture capital and growth equity have accounted for a disproportionate share of Calpers' new commitments since the pension fund overhauled its investment strategy in 2022. The shift comes despite a period of private equity underperformance relative to listed equities. The S&P 500 generated a total return of approximately 65% over the three years to March 2026, compared with 24% for a US private equity index compiled by Cambridge Associates.
The reallocation has raised concerns over the valuations of privately held AI companies, including OpenAI and Anthropic, and whether venture capital investments offer sufficient diversification from the technology sector. Roger Vincent, founder of Summation Capital and former head of private equity at Cornell University's endowment, reportedly questioned the rationale for increasing exposure to venture capital and growth equity amid rising valuations.
The move also reflects investor reassessment of the sustainability of the AI-driven equity rally, with the Nasdaq 100 falling 7.7% from its early October peak following renewed concerns over technology companies' capital expenditure plans.
Anton Orlich, Calpers' deputy chief investment officer, reportedly said the strategy would reduce concentration risk while providing exposure to privately held companies trading at more attractive valuations than their listed counterparts. Orlich also argued that private equity valuations offered opportunities to generate returns while reducing exposure to a potential correction in listed technology stocks. He identified strategic acquisitions as an alternative exit route for venture capital and growth equity investments, given a challenging IPO market.
Venture capital and growth equity have accounted for a disproportionate share of Calpers' new commitments since the pension fund overhauled its investment strategy in 2022. The shift comes despite a period of private equity underperformance relative to listed equities. The S&P 500 generated a total return of approximately 65% over the three years to March 2026, compared with 24% for a US private equity index compiled by Cambridge Associates.
The reallocation has raised concerns over the valuations of privately held AI companies, including OpenAI and Anthropic, and whether venture capital investments offer sufficient diversification from the technology sector. Roger Vincent, founder of Summation Capital and former head of private equity at Cornell University's endowment, reportedly questioned the rationale for increasing exposure to venture capital and growth equity amid rising valuations.
The move also reflects investor reassessment of the sustainability of the AI-driven equity rally, with the Nasdaq 100 falling 7.7% from its early October peak following renewed concerns over technology companies' capital expenditure plans.
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