The Top Holding for CalPERS, America's Largest Public Pension Fund, Is the Closest Thing You'll Find to a Guaranteed Investment on Wall Street

Globe and Mail

29-05-2025

There's nothing more important to investors than data -- and they're rarely, if ever, lacking for it on Wall Street. Between earnings reports, regular U.S. economic data releases, and Donald Trump's administration changing its tune on tariff and trade policy on a seemingly regular basis, there's always something for investors to dive into and learn.
May 15 marked one of these pivotal data releases for investors.
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No later than 45 calendar days following the end to a quarter, institutional investors managing at least $100 million are required to file Form 13F with the Securities and Exchange Commission. A 13F provides a snapshot for investors that allows them to see which stocks, exchange-traded funds (ETFs), and (select) options contracts Wall Street's most-prominent money managers have been buying and selling. It's a nice way to uncover which securities and trends are piquing the attention of big-money investors.
But there's a big world of investment dollars that extends beyond Berkshire Hathaway 's Warren Buffett and select billionaire fund managers -- and it pays to know what these funds are holding.
For example, the California Public Employees' Retirement System, commonly known as CalPERS, manages north of $500 billion in assets on behalf of its more than 2 million members, which includes public employees, retirees, and their families. CalPERS spreads its investment capital across a broad swath of asset classes, including fixed income (e.g., Treasury bonds), private debt, private equity, and of course, public equities (stocks and ETFs).
Though CalPERS closed the March-ended quarter with north of 1,100 securities in its portfolio, it's the top holding for America's largest pension fund that really stands out and delivers with long-term consistency.
America's largest pension fund owns pieces of many of America's most-influential businesses
Based on CalPERS' 13F, its fund managers were overseeing approximately $143.1 billion in invested assets as of the end of March. With this being a highly diversified pension fund, only 14 of these positions equated to 1% or more of invested assets.
But what a majority of these leading positions have in common is that they're Wall Street's most-influential businesses. Excluding Saudi Aramco, which isn't traded on U.S. stock exchanges, eight of the 10 public companies to have reached a $1 trillion (or greater) valuation are among these 14 positions, with only Tesla and Taiwan Semiconductor Manufacturing missing.
For instance, Apple (NASDAQ: AAPL) is the second-largest holding for CalPERS (5.4% of invested assets), based on its 13F. The roughly 34.66 million shares held equated to almost $7.7 billion in market value at the end of March. Though Apple's growth heyday might be in the rearview mirror, it's still a cash-generating machine thanks to its top-selling iPhone and its high-margin, subscription-driven services segment. Also, no public company has repurchased more of its own stock than Apple.
Artificial intelligence (AI) giant Nvidia (NASDAQ: NVDA), which briefly became the most-valuable public company by market cap, is CalPERS' No. 4 holding by market value (4.4% of invested assets). Nvidia's Hopper (H100) graphics processing unit (GPU) and Blackwell GPU architecture are primarily responsible for overseeing generative AI solutions and the training of large language models in high-compute data centers. By one estimate, AI can add $15.7 trillion to the global economy come 2030, and Nvidia is at the center of this growth trend.
The point being that many of CalPERS' biggest positions are tied to businesses that are instrumental to the ongoing success of the American and global economy.
But it's CalPERS' top holding that has an as-of-now perfect track record of delivering for long-term investors.
CalPERS' top holding has (thus far) been a guaranteed moneymaker
Though CalPERS' $143.1 billion portfolio is primarily comprised of individual stocks, the largest holding for America's top pension fund is an ETF: the Vanguard S&P 500 ETF (NYSEMKT: VOO) (7.9% of invested assets).
The beauty of ETFs is they can provide instant diversification or concentration, depending on your preference, with the click of a button. In this instance, the Vanguard S&P 500 ETF attempts to mirror the performance of the benchmark S&P 500 (SNPINDEX: ^GSPC).
Instead of having to buy 503 separate securities -- three S&P 500 companies have two classes of shares, which is why there are currently 503 components and not an even 500 -- and weight them appropriately to effectively match the returns of the S&P 500, the Vanguard S&P 500 ETF does this for investors with the click of the buy button.
In return for this ease of investment, investors pay various fees in the form of the net expense ratio. These fees cover the costs of overseeing the fund, marketing, and so on. Generally, the more active the turnover in the fund, the higher the net expense ratio.
The two biggest S&P 500 index funds by net assets are the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY). The SPDR S&P 500 ETF Trust was the first ETF to be listed on a national stock exchange.
Although the Vanguard S&P 500 ETF and SPDR S&P 500 ETF Trust effectively mirror the returns of the benchmark S&P 500, the two have one notable difference: their net expense ratios. The SPDR S&P 500 ETF Trust has a low net expense ratio of 0.09%. This means $0.90 of every $1,000 invested will be kept for various fees. Meanwhile, the Vanguard S&P 500 ETF has a net expense ratio of just 0.03%. While six hundredths of a percent might not sound like much, it can add up over multiple decades as your investment grows.
But what really makes the Vanguard S&P 500 ETF special is its, thus far, guaranteed long-term returns.
To preface, nothing is concretely a given when it comes to the stock market. Neither I nor any analyst can tell you with 100% certainty what comes next for stocks. But S&P 500 tracking indexes like the Vanguard S&P 500 ETF are the closest thing to an investment guarantee on Wall Street.
^SPX data by YCharts. The above S&P 500 chart only goes back as far as 1950.
Every year, the analysts at Crestmont Research update a data set that examines the rolling 20-year total returns, including dividends, of the benchmark S&P 500 dating back to the start of the 20th century. Even though the S&P wasn't officially incepted until 1923, researchers were able to track the performance of its components in other major indexes from 1900 to 1923 to obtain the relevant total return data. This resulted in 106 rolling 20-year periods to examine (1900-1919, 1901-1920, 1902-1921, and so on, to 2005-2024).
What Crestmont Research found was that all 106 rolling 20-year periods produced a positive annualized return. Hypothetically, if you had purchased an S&P 500 tracking index at any point between 1900 and 2005 and simply held for 20 years, you made money every time. It didn't matter if you purchased at the top of a bull market, held through a recession or depression, or navigated through a war or pandemic -- you would have grown your wealth every time.
Arguably no stock market investment has delivered with more long-term consistency than S&P 500 index funds – and no S&P 500 ETF has a more favorable net expense ratio than the Vanguard S&P 500 ETF.
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