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We wrote an article in January 2011 that reviewed the performance of the largest pension fund in the nation -- Calpers (California Public Employees' Retirement System). In the article, we compared its performance with that of a strategic asset allocation from California State University and Public Employees Savings Plus Plan. For more information on the plan's investment choices and their performance, see this document. The plan consists of 12 low cost Vanguard index funds. These funds enable participants to gain exposure to 3 major assets: US Equity (SPY or VTI), Foreign Equity (EFA or VEU), Fixed Income (AGG or BND).

Asset ClassTickerName
SMALL BLENDNAESXVanguard Small Cap Index
SMALL BLENDNAESXVanguard Small Cap Index
Foreign Large BlendVGTSXVanguard Total Intl Stock Index
MID-CAP BLENDVIMSXVanguard Mid Capitalization Index
MID-CAP BLENDVIMSXVanguard Mid Capitalization Index
LARGE BLENDVFINXVanguard 500 Index Investor
LARGE BLENDVFINXVanguard 500 Index Investor
LARGE BLENDNBSTXNeuberger Berman Socially Resp Tr
Intermediate-Term BondVBMFXVanguard Total Bond Market Index
Intermediate-Term BondVBMFXVanguard Total Bond Market Index
Short-Term BondVBISXVanguard Short-Term Bond Index
ROOTCASHCASH

The previous article revealed that professors and staff participating in the defined contribution plan California State University and Public Employees Savings Plus Plan can do better by using a simple diversified portfolio that periodically rebalances. The data was up to 6/2010, the fiscal year ending for CALPERS.

Let's have an up to date review, now that CALPERS has its annual report for 2011 published (ending on June 30, 2011). The report shows the following performance:

(click to enlarge)

The following is the performance of California State University and Public Employees Savings Plus Plan Strategic Asset Allocation Moderate that has 60% in stocks and 40% in bonds, closely matching Calpers' risk profile.

Annualized Return (ending on June 30, 2011)

Name1Yr
AR
3Yr
AR
5Yr
AR
10Yr AR
California State University and Public Employees Savings Plus Plan Strategic Asset Allocation Moderate20.04%4.17%4.76%%6.37%

Other than slightly outperforming in the last one year, CALPERS portfolio lagged in the past 3, 5 and 10 years.

Sound asset allocation and disciplined rebalance can help individuals to do no worse or even better. One can take control of his/her retirement if regular efforts (30 minutes a month?) are made.

Source: California State University Professors Are Better Off Than Their CALPERS Pension Funds