SAN FRANCISCO Feb 4 International stocks and
alternative investments helped propel public pension plans with
assets of $5 billion or more to better returns than their
smaller counterparts, a report by Wilshire Associates said on
Plans with at least $5 billion in assets tracked by the
Santa Monica, California-based consulting firm posted a median
return of 2.45 percent in the fourth quarter 2012.
The report, which includes nearly 1,570 plans representing
more than $2.75 trillion in assets, shows that plans with less
than $1 billion in assets posted a median return of 1.71 percent
during the quarter.
The larger funds posted a median return of 13.43 percent for
all 2012, compared with a median return of 12.47 percent by the
The larger plans also notched better returns over 10 years
-a median 7.96 percent compared with a median 6.95 percent by
The larger plans' higher gains are due to the greater
resources available they have to vary the mix of their holdings,
said Robert Waid, a managing director at Wilshire.
"Smaller plans have more difficulty diversifying into
certain asset classes," said Waid. "Smaller plans don't have the
resources to keep track of all that."
At the end of October, the $256.1 billion California Public
Employees' Retirement System, the biggest U.S. pension fund,
managed 65 percent of its assets on its own and had 35 percent
managed externally, according to a spokesman.
The fund posted a 13.26 percent return last year, compared
with the 13.43 percent median return for larger plans last year,
led by gains in its global stocks and real assets, including
stakes in office, apartment, industrial and office buildings.
The fund's assets include investments in domestic and
international stocks and debt, private equity, real estate,
timberland, commodities and infrastructure.
The fund at the end of October had 49 percent of its assets
allocation to public equity, 13 percent in private equity, 18
percent in income, 9 percent in real estate and 1 percent in
forestland and infrastructure. The remainder of the fund's
assets were in its liquidity, inflation and absolute return
strategy asset classes.