The California Public Employees’ Retirement System (CalPERS) lost roughly 71 percent of its $468.4 million investment in the private-equity Clean Energy & Technology Fund (CETF), and is refusing to fully disclose how the money was spent.
The Sacramento-based pension giant paid $468,423,814 to CETF, a fund launched in 2007 to invest in private equity in clean energy and technology. As of March 31, 2025, the remaining value of the investment and cash returned stands at just $138,045,373, reflecting a loss of more than $330 million.
CalPERS, which oversees pensions for more than 1.5 million California public-sector workers and retirees, says its pension benefits are only 79 percent funded, leaving an estimated $180 billion in unfunded liabilities, ultimately placing California taxpayers on the hook.
In light of the CETF loss, public-finance expert Marc Joffe of the California Policy Center asked: “If you can get these kinds of returns on the public markets, why bother with all the complexities and the illiquidity involved in private equity?”
CalPERS argues that the CETF dates back to an earlier era, “before the pension fund’s board and staff worked together to tightly focus our private-equity strategy,” according to spokesperson Abram Arredondo.
Arredondo added that since 2022, CalPERS has diversified its private-equity holdings and reduced fees by 10 percent.
Yet transparency concerns remain. CalPERS declined to provide detailed records on CETF management contracts or the underlying investments, citing a California law that exempts many records of alternative investments from public disclosure.
First Amendment Coalition legal director David Loy said: “This is a serious transparency concern if the public doesn’t have visibility into how public money, especially pension funds, is being invested and to what degree of risk.”
For a fund backed by state employees and taxpayers, the CETF outcome raises broader questions about CalPERS’ expanding reliance on private equity.
While the 2024-25 fiscal year saw CalPERS record an overall return of 11.6 percent, with public equities returning 16.8 percent and private equity 14.3 percent, critics contend those figures rely on opaque valuations and may obscure hidden risk and elevated fees.
In 2021, CalPERS raised its private-equity target from 7 percent of its portfolio to 13 percent, and in 2024 it increased it again to 17 percent—despite the fact that private-equity valuations are less transparent and more illiquid than those of public-market investments.
For California’s public employees, retirees, and taxpayers alike, the CETF loss underscores the risks of entrusting large pension funds to illiquid, high-fee private-equity strategies.
