The largest U.S. public pension cut its direct holdings of shares in the so-called Magnificent Seven by about 26% in the first half, according to calculations from regulatory filings. Its deputy investment chief framed private equity as a diversifier.
The California Public Employees' Retirement System has been leaning away from the handful of technology companies that dominate the stock market and toward private equity.
The fund has "traded large concentrated exposure to those seven companies for exposure to several hundred firms via private equity," Deputy Chief Investment Officer Anton Orlich told the Financial Times. According to the newspaper's calculations from regulatory filings, CalPERS cut the number of shares it directly holds in the so-called Magnificent Seven by about 26% in the first half of 2026.
Orlich also said private-market pricing looks more attractive than elevated public valuations.
What the 26% measures
The figure is a reduction in the number of shares held directly, not a dollar amount moved from one asset class to another. CalPERS has not disclosed how much money shifted, and the reduction in direct holdings does not by itself say how the fund's total exposure to those companies changed, since large pensions also hold stocks through index portfolios and other vehicles.
CalPERS manages more than $600 billion.
A counter-signal for fundraising
The comments arrive at a difficult moment for private equity fundraising. Many institutional investors have pulled back on new commitments because funds have returned less cash than expected, with exits slow to recover. Data from KPMG this week showed the number of private equity exits at a 22-quarter low, even as their total value rose.
Against that backdrop, the country's largest public pension publicly describing private equity as a way to diversify away from public-market concentration is a supportive signal for managers raising money.
The other side of the trade
The view has critics. Private equity valuations are reported with a lag and less frequently than public prices, and investors have debated whether the marks on private portfolios fully reflect current conditions. Moving from public megacaps to private companies swaps one risk, concentration, for others, including illiquidity and valuation uncertainty.
There is also a timing point. CalPERS was trimming direct megacap holdings in the first half, before this week's sharp selloff in AI-related stocks.
What to watch
CalPERS' investment committee materials in November, any change to its private equity allocation target, and whether other large pensions describe similar shifts.