CalPERS Cuts Direct Holdings in Magnificent Seven by 26% in First Half of 2026, Shifts to Private Equity
CalPERS Deputy Chief Investment Officer Anton Orlich stated in an interview with the Financial Times that the fund has shifted its concentrated exposure to seven large U.S. tech companies to investments in hundreds of companies to diversify equity risk.
According to regulatory filings, CalPERS reduced its direct holdings in the Magnificent Seven stocks by 26% in the first half of 2026. The seven companies are Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla.
CalPERS manages approximately $640 billion. This adjustment comes amid high valuations in public market tech stocks and discussions on the sustainability of returns driven by AI-related capital expenditures. Orlich noted that private company valuations are relatively more attractive.
Since adjusting its investment strategy in 2022, venture capital and growth equity have comprised a higher proportion of new commitments. The fund commits about $16 billion annually to private equity, involving 134 managers and 421 funds.
This reduction only targets the fund's directly held active positions and does not include passive index holdings. Orlich stated that this move aims to reduce concentration risk and provide a buffer in case of potential downturns in the public market.
Mechanically, large pensions are reducing direct holdings in a few highly valued tech stocks, with funds flowing into a broader private equity portfolio. Beneficiaries include private market managers and relatively lower-valued private companies; the Magnificent Seven in the public market face selling pressure from institutional active positions.
Source: Public Information
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CalPERS Deputy Chief Investment Officer Anton Orlich confirmed to the Financial Times that the fund will reduce its direct holdings in the Magnificent Seven by 26% in the first half of 2026, while increasing exposure to private equity in hundreds of companies.
In terms of capital flow, funds are moving from direct holdings in the seven tech giants in the public market to commitments in private equity. Since 2022, the proportion of venture capital and growth equity has increased. Orlich believes that private company valuations are more attractive and can hedge against potential corrections in the public market.
This is similar to the rebalancing actions taken by other large institutions after a high concentration in tech stocks. We are currently in a phase where discussions about valuations of AI-driven public market tech stocks are heating up, and the relative attractiveness of private market valuations is being mentioned.
Essentially, this is about diversifying asset allocation. Large pensions are reducing concentration in a single sector and increasing the weight of private equity. The mechanism is that when the weight of a few stocks in the public market is too high, active positions are adjusted to reduce portfolio volatility while taking advantage of valuation differences in private equity.
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- Magnificent Seven holdings cut by 26%, replaced with hundreds of companies
- Public market is expensive, private equity valuations look cheaper
- Concentration risk reduced, funds flowing to private equity