CalPERS maintains conviction in private markets despite market cycles, with Marcie Frost highlighting a specialized approach focused on high-quality managers. Private credit allocation stands at around 4% after an 8% peak, diversified enough to weather software exposure concerns. Private equity delivered 14.3% last fiscal year, private debt 12.8%. "We still have a lot of conviction in our private markets allocation," Frost says.

The current setup suits the next 4 to 6 years, supported by strong liquidity unlike many public pension peers reducing exposure. Recalibration over three years included manager selection, fee reductions of about 100 basis points, increased co-investments, and a push into emerging managers targeting 10% of the portfolio. Reentry into venture capital adds further diversification.

The recipe of thoughtful selection, cost discipline, and liquidity provides confidence amid approaching cycles.

Source: Video - CalPERS CEO Frost on Private Credit and Private Equity