By Dale Kasler
dkasler@sacbee.com
Published: Thursday, Aug. 18, 2011 – 12:00 am | Page 6B

The recent wreck on Wall Street cost CalPERS billions of dollars, and the pension fund believes there’s more instability coming.

“We should expect more market riots,” chief investment officer Joseph Dear told CalPERS’ governing board on Wednesday.

The California Public Employees’ Retirement System had barely put the wraps on one of its best investment years ever – gaining $37 billion, or nearly 21 percent – when the markets started tumbling.

Since the new fiscal year began July 1, the fund’s portfolio has lost $9 billion. That has erased about one-fourth of the previous year’s profits.

There’s no immediate turnaround in sight. With about half of CalPERS’ portfolio tied up in stocks, continued turbulence in the equity markets will likely depress the portfolio.

“It’s hard to see a double-digit (percentage) return this year, but it’s still early,” Dear said.

CalPERS’ investment performance is critical. The less money it earns, the more it needs from taxpayers to keep the pension system going.

The heavy investment losses CalPERS took in the 2008 crash, coupled with chronic state budget deficits, have sparked calls from many Republican lawmakers and others to overhaul the pension system.

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