Portfolio Doubles Its Size in Five Years
21 Percent Return in 2007
CalSTRS earned a 21 percent return on investments last year and ended it with $170.4 billion in assets, making fiscal year 2006-07 one of our most spectacular. The system’s dollar value doubled in the four and a half years following the U.S. stock market’s steep decline in October 2002.
With 2006-07 producing the fourth straight year of double-digit investment returns, CalSTRS yielded a 10-year average return of 9 percent.
Overall, the fund’s performance continues to exceed the 8 percent average annual return necessary to meet projected long-term benefit liabilities.
We played it smart when the opportunities arose, demonstrating a consistent flow of great investment decisions over the last five years. However, during the summer months of 2007, the market created some ups and downs in our portfolio.
Despite excellent money management, the pension system continues to deal with a projected funding shortfall. For more information on how the CalSTRS board is working to address this issue, see CalSTRS Funding Gap Narrows.
Although it is vital to have a healthy fund, your retirement benefit is guaranteed for your life. Your benefit is based on a formula — not the size of our portfolio. The basic CalSTRS retirement formula is: service credit X age factor X final compensation.
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