CalPERS cuts Big Tech holdings 26% as it expands private equity exposure
California Public Employees’ Retirement System (CalPERS) has reduced its holdings in the seven largest US technology stocks by 26% while increasing allocations to private equity, as the $640bn pension fund seeks to diversify its portfolio amid concerns over elevated public market valuations, according to a report by the Financial Times.
The US pension fund reduced its combined direct shareholdings in Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla during the first half of 2026, shifting towards investments in a broader range of privately held businesses.
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.
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.
The shift comes despite a period of private equity underperformance relative to listed equities. 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.
Orlich reportedly argued that private equity valuations offered opportunities to generate returns while reducing exposure to a potential correction in listed technology stocks. He also identified strategic acquisitions as an alternative exit route for venture capital and growth equity investments amid a challenging IPO market.
However, 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.
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.