NORTH AMERICA - The California Public Employees Retirement System's (CalPERS) real estate portfolio earned the highest return of any of the asset classes it invested in during the 2011-12 fiscal year.

The real estate portfolio produced a 15.9% return for the period, outperforming its benchmark by more than 3%. 

The fund produced an overall return on all of its investments of 1% over the same period.

The success in real estate was split into three areas. 

Joe Dear, chief investment officer, said: "The strategic portfolio produced a return of 22.26% net of fees for the same time period. This outperformed the ODEC index, which yielded a 13.5% return. 

"Over the past 12 months, the strategic portfolio grew by 24% from $10bn (€8.2bn) to $13bn." 

One of the pension fund's main strategies for this has been to focus on core assets. 

Over the long term, it wants to have 75% of the real estate portfolio made up of this strategy.

The legacy portfolio in the real estate sector produced a return of 9.5%. 

These were existing assets already owned by the pension fund and were more of a risky nature, including investing in land and development. 

The real estate securities portfolio owned by the pension fund earned a 2% return.

The other asset class that produced a double-digit performance was fixed income, returning 12.7%. 

The asset classes with the poorest performance were timberland at -11%, equities at -7.2% and private equity at -5.4%.

Dear said: "The last 12 months were a challenging period for all investors as the ongoing European debt crisis and slowing global economic growth increased market volatility and reduced equity returns. 

"It's a clear reminder we must remain focused on performance, risk and internal controls in today's financial environment."