Two of the largest pension funds in the U.S. report that their real estate holdings are significantly underperforming their other investments, as they slowly but surely recover from the latest economic crisis.

 

The California Public Employees’ Retirement System (CalPERS), the nation’s largest pension fund, reported an 11.4% return on its investments for the one-year period ended June 30. The Sacramento-based fund manages $199.4 billion in assets, but had lost 23.4% of its worth in the previous fiscal year.

 

Meanwhile, the nearby California State Teachers’ Retirement System (CalSTRS) reported a 12.3% return for the latest fiscal year. That, too, is a sharp rebound from the previous fiscal year.

 

Unfortunately, both funds noted that real estate was the only asset class to drop in value. CalPERS said that its real estate assets dropped 37.1% while CalPERS recorded a 12.4% decline.

 

By contrast, CalPERS reported that its private equity investments were a top performer, up 30.9%. CalSTRS saw its private equity investments jump 21.7%.

 

One saving grace is that the reporting on real estate performance lags that of other asset classes. The latest data is for real estate returns as of March 31, but reflects more current data, through June 30, for all other assets.

 

Here’s hoping the last quarter was a hum dinger.