What's super-gigantic and almost totally ineffective at makingmoney?

Insert your federal government joke here. But the same can besaid, sadly, for the nation's largest public employee retirementsystem, which managed to eke out a rather awful 0.14-percent netreturn on its investments in the 2011-2012 fiscal year.

The Orange County Register reports that the California PublicEmployees' Retirement System, which expects a healthy 7.5 percenton its investments to keep its $200-plus-billion in assets afloat,did not do so.

Reports earlier this year suggested the return rate might beabout 1 percent, but when the final figures came in, the fundaveraged just 0.14 percent overall. It ended the fiscal year with$237 billion in the bank, down from $241 billion the previousyear.

CalPERS' Comprehensive Annual Financial Report said that publicequities lost approximately 7 percent but other investments, suchas real estate, did well enough to offset a complete loss.

Administrators blamed the lousy performance on the European debtcrisis, increased market volatility and bad investments in troubledspots including Russia, Brazil and Turkey.

Critics, such as Dan Pellissier of California Pension Reform,suggest the fund might have earned better returns if it had madeinvestments in home-grown entities, especially the S&P 500,though even it is now widely predicted to take a big plunge in the coming months.

"They spend a lot of money trying to beat the market, and it'snot going to happen," he told the Register. "When you're CalPERS,you have to invest in the losers, too, because you're just toobig."

Pension fund officials suggested that the low returns are justpart of the current market conditions and do not represent a totalloss for the organization.

“It’s important to remember that CalPERS is a long-term investorand one year of performance should not be interpreted as a signalabout our ability to achieve our investment goals over the longterm,” said Henry Jones, Chair of CalPERS Investment Committee,back in July.

A CalPERS spokesperson admitted last week that the fund'sinvestments are doing somewhat better, especially considering themassive losses suffered after the 2008 crash.

“We’re all dependent on the economy and the markets, but ourfiscal performance to date is about 7 percent,” said Brad Pacheco,to the Register. “But I don’t want to sugarcoat it, because thoseyears of downturn did raise costs for employers and taxpayers.”

CalPERS lowered its overall expectations of return to 7.5percent from 7.75 percent last year, although critics continue tosay the figure is too high.

The losses may provide some insight into the pension fund'sunusually vocal and litigious battles against several California citieswho are hoping to shake their pension obligations as part of theirbankruptcy proceedings.