America’s two largest pension funds are the California Public Employees’ Retirement System, or CalPERS, and the California State Teachers’ Retirement System, or CalSTRS. CalPERS is the nation’s largest pension fund and had more than 1.8 million members as of June 30, 2015. The number of retired fund beneficiaries in June 2015 was 611,078, or 34% of the plan’s members.

CalSTRS is the largest educator-only pension fund in the world and the second-largest pension fund in the United States. As of May 2016, CalSTRS had approximately 896,000 members from the state’s 1,700 school districts, county offices of education and community college districts.

CalPERS

On May 31, 2016, former CalPERS chief executive officer Fred Buenrostro was sentenced to 54 months in prison for corruption and fraud charges after his July 11, 2014, guilty plea. Buenrostro admitted to accepting more than $250,000 in bribes from placement agent Alfred Villalobos. Buenrostro gave Villalobos and his private equity clients access to CalPERS’ confidential information relating to investments, internal deliberations and other proprietary matters.

As of Feb. 29, 2016, private equity investments accounted for $27.1 billion, or 9.7% of the CalPERS portfolio. Real estate also comprised 9.7% of the CalPERS portfolio, worth a reported value of $26.9 billion. Forest land was a separate category, accounting for $2.2 billion, or 0.8% of the portfolio’s total assets of $278.9 billion.

In its annual report for the fiscal year ending June 30, 2015, CalPERS reported the following portfolio holdings: approximately $14.45 billion in domestic cash equivalents; $281.04 million in international currency; $24.71 in Treasuries and government (including state) agency bonds; $9.72 billion in international sovereign debt securities; $2.04 billion in foreign issued, U.S. dollar-denominated bonds; $12.95 billion in mortgage-backed securities (MBS); $217.28 million in mortgage loans; $9.58 billion in asset-backed securities; $17.09 billion in U.S. corporate bonds; and $90.29 million in international corporate bonds. All of the foregoing amounts were based on market value, rather than book value.

An itemization of the domestic equity investments in the CalPERS portfolio appears in the 13F form for the quarter ended on March 31, 2016, filed with the Securities and Exchange Commission (SEC) on May 4, 2016. The top-weighted stock in the CalPERS domestic equity portfolio was Apple Inc. (NASDAQ: AAPL). CalPERS held 15.1 million Apple shares at that time. Although their reported market value was $1.64 billion on March 31, 2016, Apple’s share price has declined from $108.99 on that date to $97.92 as of June 3, 2016. By June 3, the market value of Apple shares owned by CalPERS had fallen to $1.48 billion.

Other top-weighted stocks in the CalPERS domestic equity portfolio, as of March 31, 2016, were: Microsoft Corp. (NASDAQ: MSFT) at 1.80% of the portfolio weight, Exxon Mobil Corp. (NYSE: XOM) at 1.66%, Johnson & Johnson (NYSE: JNJ) at 1.32% and General Electric Co. (NYSE: GE) at 1.26%.

CalSTRS

CalSTRS began planning a risk mitigation strategy on Feb. 10, 2014, because approximately 55% of its portfolio was invested in stocks. Although the CalSTRS board of administration set the assumed rate of return at 7.5%, the fund earned only 4.5% in fiscal 2014. The risk mitigation guidelines were approved on Nov. 4, 2015, and published in the CalSTRS Investment Policy and Action Plan in April 2016.

Under the April 2016 guidelines, no more than 35% of the total fund can be invested in instruments that are not publicly traded daily. With the exception of the United States Treasury or government agency obligations, no more than 3% of the total fund can be invested or exposed to any one security or corporation, and no more than 15% of any asset class can be invested in any one security.

As of April 30, 2016, the CalSTRS portfolio consisted of the following asset allocations: global equities at 55.4%, fixed income assets at 16.6%, real estate at 14.2%, private equity at 13.0% and absolute return investments at 1.7%. CalSTRS plans to reduce its allocation of absolute return investments to zero. On March 31, 2016, the CalSTRS portfolio, inclusive of all assets, had a value of $186.8 billion.

An itemization of the domestic equity investments in the CalSTRS portfolio appears in the 13F form for the quarter ended on March 31, 2016, filed with the SEC on May 16, 2016. The top-weighted stock in the CalSTRS domestic equity portfolio at that time was Apple, at 2.85% of the portfolio weight. Microsoft shares accounted for 2.05% of the equity portfolio assets. Exxon shares comprised 1.63% of the domestic equity portfolio weight. Shares for Johnson & Johnson accounted for 1.39%, and General Electric shares also represented 1.39% of the domestic equity portfolio weight.