- California Public Employees’ Retirement System is shifting away from large US technology companies and increasing its exposure to private equity, the Financial Times reported. Calpers has traded large exposure to seven companies for several hundred firms to diversify equity risk, deputy chief investment officer Anton Orlich told the FT.
- The fund cut the combined number of shares it directly held in the Magnificent Seven stocks by 26% in the first half of 2026, according to FT calculations based on regulatory filings. The group comprises Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla.
- Orlich said valuations are higher in public equity markets, where concentration in a few names may underperform on a relative basis. He said private companies are priced at more attractive levels, which could insulate Calpers in an eventual public-market downturn.
- Calpers is the biggest US pension for government workers, with $637.1 billion in assets as of June 30. It reported a preliminary net investment return of 14.8% for the 12 months, helped by its public and private equity portfolios.
What Happened?
The largest US public pension is reducing its concentration in megacap tech and adding to private equity, Bloomberg reported, citing an FT interview with Orlich. The shift comes as tech stocks that powered a four-year bull run in US equities bore the brunt of selling this week. Earnings from megacap companies raised concerns over whether AI spending will pay off. Calpers said in July that strong performance in public and private equity helped it deliver its 14.8% preliminary return.
Why It Matters?
When a $637.1 billion pension trims Magnificent Seven holdings, it signals that even long-term institutions see concentration risk in the AI-driven megacaps. Orlich’s view that private companies are more attractively priced puts Calpers on the side of private markets in the valuation debate. The move spreads its equity risk across several hundred companies instead of a handful of names. Given its size, even a modest reallocation moves a large amount of capital.
What’s Next?
Megacap tech faces fresh tests next week with results from Microsoft, Amazon and Alphabet. Those reports will show whether the concerns over AI spending that hit stocks this week deepen or ease. Future regulatory filings will reveal whether Calpers continues to reduce its directly held Magnificent Seven shares. Investors will also watch whether other large pensions follow with their own shifts toward private equity.
Affected Tickers and Coins: AAPL, MSFT, GOOGL, AMZN, NVDA, META, TSLA
Source: Bloomberg
