The largest U.S. pension fund is ramping up its exposure to private equity and private credit in a $34-billion bet that the riskier assets will fuel higher returns. The board of the California Public Employees’ Retirement System voted to boost the target allocation for private equity to 17% of its portfolio, up from 13%. It also approved increasing private credit to 8% from 5%.
Mullissa Willette, a CalPERS board member, had wanted the pension fund to delay the change in allocation targets until the next asset review cycle, when a new investment chief is expected to be in place. “I’m more comfortable waiting for a new CIO to come on board” who will likely reassess the asset allocations, she said during a committee meeting. “And then we’ll be doing this all again in 18 months.” Even as CalPERS is seeking to raise its exposure to private equity, it had a $6.