CalPERS sold $13bn of tech stocks. Index funds put only $4bn back
CalPERS sold about $13.5bn of seven mega cap stocks in the first half and bought $10.8bn of S&P 500 funds. Those funds put only about $4.0bn back into the same stocks, leaving most of the exposure reduced.
CalPERS, California's public pension fund, sold 40% of its Nvidia shares in the first half of 2026. It also cut Microsoft, Apple and Alphabet.
Buying S&P 500 funds did not undo the sale. An index fund hands only about 37 cents of each dollar back to these stocks, so CalPERS's exposure to the market's leaders fell by roughly 14%.
What CalPERS sold
Seven of the eight biggest names were cut, and the eighth was added to. The quarterly 13F filing lists a large investor's US listed equities. The CalPERS Form 13F for 30 June, set against the filing for 31 December, shows Nvidia down from 76.4 million shares to 46.1 million, a drop of 39.7%.
The other cuts were broad but smaller than Nvidia's. Microsoft fell 25.2% and Apple 18.5%, and Alphabet's two share classes fell 21.4% and 24.2%. Meta, Broadcom and Amazon fell by 15%, 8% and 7%, while Tesla, the one addition, rose 6.6%.
The Financial Times counted a 26% cut across the seven largest US technology stocks. Private Equity Wire names them as Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla. The filings reproduce the cut for those seven: 192.7 million shares fell to 142.2 million.
In dollars, the eight names fell from $58.6bn to $45.6bn. That is 33.5% down to 25.7% of the 13F book, which itself grew, so the group lost weight inside a rising portfolio.
What the index funds added back
The same filing shows the shift into index funds. The iShares Core S&P 500 ETF was absent at 31 December. It stood at 1.27 million shares ($0.83bn) at 31 March and at 15.2 million shares worth $11.4bn by 30 June.
The larger index position was already in the book, and CalPERS trimmed it slightly. Its Vanguard S&P 500 ETF was worth $19.8bn at 31 December and $21.1bn at 30 June. CalPERS cut about 0.9 million shares, worth $0.6bn.
To size the trade, value every share change at 30 June prices. That approximates dollars traded, since the sales were spread across the half. CalPERS sold about $13.5bn of seven stocks and bought $0.1bn of Tesla, a net $13.3bn.
Nvidia alone is $6.1bn of that net sale. Alphabet is $2.2bn, Microsoft $2.0bn and Apple $1.9bn.
Net additions to the two index funds come to about $10.8bn. That equals 81% of the net direct sales, because $10.8bn divided by $13.3bn is 0.81.
The index funds give back only about 37 cents on the dollar, because an S&P 500 fund spreads each dollar across all 500 companies. The eight companies made up 37.2% of the iShares Core S&P 500 ETF on 30 September, the closest date to 30 June that the iShares page lists. On 31 December the share was 37.6%.
Applied to $10.8bn of net buying, about $4.0bn returns to the stocks CalPERS sold, against $13.3bn sold. Vanguard's fund tracks the same index, so the same weights apply to it.
The calculation must also include the Vanguard fund CalPERS already held. Total exposure to the eight, meaning direct stakes plus each fund's share in them, was about $67.0bn at 31 December, valued at 30 June prices. It fell by roughly $9.3bn, or 14%.
CalPERS cut its direct bet by 23% and its total exposure by about a seventh. Roughly seven dollars in ten that left the eight names did not come back through the index.
Why CalPERS reduced exposure
Concentration risk is the reason CalPERS reportedly gave. Anton Orlich, deputy chief investment officer, reportedly told the FT, according to Private Equity Wire, that the strategy would reduce concentration risk. It would also provide exposure to private companies trading at more attractive valuations than their listed counterparts.
A 13F cannot show that side, because private holdings do not appear in it. Orlich's remarks point to private markets as a destination, not only the index. He also named strategic acquisitions as an exit route for venture capital and growth equity holdings in a weak IPO market.
Rebalancing is a plainer explanation. Public equity returned 24.1% in the fiscal year to 30 June, so a stock book that grew past its target weight was due a trim. The whole fund returned 14.8% on a preliminary basis.
Price moves do not explain the cuts. Alphabet rose about 14% in the half, and CalPERS cut its two share classes by 21% and 24%. Nvidia rose 7% and was cut 40%, so Nvidia is the outlier. Alphabet gained about twice as much and was cut about half as hard.
Microsoft's price fell 23% while CalPERS cut 25% of its shares. So price explains part of the drop in its holding value, from $10.2bn to $5.9bn. The prices here are implied by the filings, meaning value divided by shares.
Listed shares have beaten private equity in recent years, according to Private Equity Wire. It says the S&P 500 returned about 65% over the three years to March 2026, against 24% for a US private equity index. The Nasdaq 100 fell 7.7% from its early October peak.
The sale moved money away from the assets that had performed better recently. Trading listed tech for private assets only pays if private valuations hold up, and the 13F says nothing about that.
What the filings leave out
Most of CalPERS's assets sit outside the 13F. The fund had $637.1bn at 30 June, and the 13F book is $177.4bn, or 27.8% of that. Private equity, non US holdings and derivatives do not appear in it.
CalPERS launched a Total Portfolio Approach in July 2026, according to its fiscal year release. The board approved it in November 2025.
Index funds also change CalPERS's risk exposure. A direct Nvidia stake moves with one company. The index stake moves with the market, so the weight in the leaders drifts with prices rather than with a decision.
Fund buying jumped from $0.8bn in the first quarter to $10.5bn in the second. The Q3 13F is due 45 days after quarter end, and 14 November is a Saturday, so it lands by Monday 16 November. It will show whether the buying was a single rebalancing or a continuing pace. A return to direct stakes would show the sale was a pause.