California Public Employees’ Retirement System (CalPERS) reduced its holdings in the seven largest US technology stocks by 26% while increasing allocations to private equity, as the $640bn pension fund sought to diversify its portfolio amid concerns over elevated public market valuations, according to Private Equity Wire. The pension fund reduced its combined direct shareholdings in Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla during the first half of 2026, shifting toward investments in a broader range of privately held businesses, according to Private Equity Wire.
Reallocation from listed mega-cap tech into private companies
Anton Orlich, CalPERS’ deputy chief investment officer, reportedly said the strategy would reduce concentration risk while providing exposure to private companies trading at more attractive valuations than their listed counterparts, according to Private Equity Wire. Orlich reportedly argued that private equity valuations offered opportunities to generate returns while reducing exposure to a potential correction in listed technology stocks.
Venture capital and growth equity have accounted for a disproportionate share of CalPERS’ new commitments since the pension fund overhauled its investment strategy in 2022, according to the report. The shift comes despite a period of private equity underperformance relative to listed equities.
Performance comparisons cited in the report
The S&P 500 generated a total return of approximately 65% over the three years to March 2026, compared with 24% for a US private equity index compiled by Cambridge Associates, according to the report. The report describes CalPERS as increasing allocations to private equity while reducing exposure to the seven largest US technology stocks.
Exit routes and valuation concerns highlighted
Orlich also identified strategic acquisitions as an alternative exit route for venture capital and growth equity investments amid a challenging IPO market, according to the report. The reallocation has raised concerns over the valuations of privately held AI companies, including OpenAI and Anthropic, and whether venture capital investments offer sufficient diversification from the technology sector.
Roger Vincent, founder of Summation Capital and former head of private equity at Cornell University’s endowment, reportedly questioned the rationale for increasing exposure to venture capital and growth equity amid rising valuations, according to the report. The strategy comes as investors reassess the sustainability of the AI-driven equity rally, with the Nasdaq 100 falling 7.7% from its early October peak following renewed concerns over technology companies’ capital expenditure plans.
Widely known context: CalPERS is a public pension fund. Private equity, venture capital, and growth equity are private-market strategies used by institutional investors.
