Orange County Register

The California Public Employees Retirement System will vote next week on a proposed increase in the portion of state employees’ pension money it invests in venture capital and private equity funds.

CalPERS is the nation’s largest public pension fund with $169 billion in assets for 1.6 million employees and their families.

The change could be a big boost to venture capital funds, whose fund raising plunged 60% in the fourth quarter. And private equity fundraising in the fourth quarter dropped 18%. Both are significant sources of funding for growth and innovation for U.S. companies.

CalPERS currently tries to keep 10% inventure/private equity funds but is proposing to increase that share to 14%, according to CalPERS spokesman Brad Pacheco. It actually has about 13% of assets in this category because of the shrinking value of stocks and other investments.

Even a four-point increase could be close to $7 billion.

CalPERS goals  are to have 56% in stock and hedge funds, 19% bonds, 10% real estate, 5% Treasury bonds that adjust with inflation and 10% private equity, according to the fund’s web site.

The proposal is to have targets of 49% in stocks and hedge funds, 20% bonds, 14% private equity. And for the first time CalPERS would keep 2% of its assets in cash, a first for the fund, Pacheco said.

The change would represent a bet that private equity and venture capital funds will grow faster than stocks or bonds as the economy recovers.

Other investing stories….

• Private equity invested 76% less in Q1
• O.C. body armor firm buys helmet technology
• O.C. firm bought by Massachusetts company
• O.C. wireless innovator raises $10 million
• Entrepreneurs get chance to pitch investors
• Local firm bucks trend, raises $2.5 million

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