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"We are pulling that management in-house so we control the credit and the assets that we used for our cash position," Dear said. If Greece does default, "it's likely to be bad, so you don't want to be stuck with sovereign securities that may be impaired."

The recent drop in the market is due to a recalibration of growth expectations, "and that has a depressing effect," he added.

While many states are uncertain of their ability to fund their pension funds going forward, Dear said both California and Calpers haven't taken holidays on contributions. He still puts the fund's target return rate at 7.75 percent.

"We have been able to do that for 20 years, and will be able to do that for 20 years into the future," Dear said. But probably not with fixed income and equities alone, he said. "We can go global, we can go to liquid asset classes, and do a better job of risk management."

As a fund's rate of return partly depends on the fees it has to pay, Calpers has also been working on renegotiating private-equity fees and has had success driving down costs with hedge-fund partners.

Calpers' Top Holdings (as of April 2011):

  • ExxonMobil —
  • General Electric —
  • Apple —
  • AT&T —
  • JPMorgan Chase —

Calpers' Asset Allocation (as of April 2011):

  • 53.4% — Global Equity
  • 20.4% — Global Fixed Income
  • 13.8% — Private Equity
  • 7.4% — Real Estate
  • 3.4% — Inflation
  • 1.5% — Cash Equivalents

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