The value of California’s largest public pension fund dropped by at least $15 billion this week as U.S. and international markets fell amid coronavirus fears.

The California Public Employees’ Retirement System’s portfolio, which rode a hot stock market to reach a milestone of $400 billion last month, stood at $385 billion at the end of Thursday, according to a tracker on the fund’s website.

A sudden market swing does not affect the benefits CalPERS provides to its 2 million members, but it could become problematic if the fund does not recover from the losses.

In that case, the pension fund could become obliged to raise the amount of money it charges to local government agencies in California to make up for long-term debts.

The major U.S. stock indexes, including the S&P 500 and the Dow, fell this week by amounts not seen since the financial crisis of 2008. About half of the CalPERS fund is made up of U.S. and international stocks, most of which track general market performance as part of passive indexes.

Bonds, which make up about 28 percent of the fund, also fell.

“CalPERS is a long term investor,” spokesman Wayne Davis said. “We monitor the markets, we pay attention to the news, but we focus on our long term strategy.”

Davis said the fund has been diversifying its investments over the last two to three years to prepare for a market downturn, adding more long-term bonds and investing in indexes that select stocks based on factors other than market capitalization.

The California State Teachers’ Retirement System declined to disclose the value of its fund Friday. It stood at $254 billion at the end of December, the most recent number the fund has made available.

“CalSTRS is a long-term investor and we think in terms of decades — not days, weeks or months,” spokesman Thomas Lawrence said in an email. “We are keeping an eye on the impact of the coronavirus, but are not making any dramatic changes to investment strategy. If necessary, we can make subtle course corrections to our portfolio.”

CalPERS is about 70 percent funded, meaning it has about 70 percent of the assets it would need to pay all its short- and long-term liabilities. CalSTRS is about 64 percent funded.

Since both the funds are long-term investors, the short-term losses don’t represent a crisis.

“The market was priced for perfection just nine days ago, but the rapid spread of coronavirus and the unknowns surrounding its magnitude and impact have spurred a market correction in the days since,” Greg McBride, chief financial analyst for personal finance company Bankrate, said in a written statement. “Expect volatility to continue until there is a better handle on the impact and spread of it, but like so many other triggers of market turmoil this too shall pass.”

In October 2007, before the last recession, CalPERS hit what was then a record high value of $260 billion. As the crisis deepened, the fund’s value hit a record low of $165 billion in February 2009. That June, it was about 61 percent funded.

The fund recovered by April 2013, when its value surpassed the 2007 peak. Its value generally has been growing since, but so have its liabilities.

CalPERS’ value dropped a lot when markets fell at the end of 2018, yet it ended up with a 6.7 percent annual return by the end of the fiscal year in June, just short of its 7 percent annual target.

This story was originally published February 28, 2020 at 1:51 PM with the headline "CalPERS fund drops by $15 billion amid market plunge and coronavirus fears."