Investment Returns Solid But Plenty of Work Still to be Done

Blog entry Jack Ehnes

CalSTRS has ended the 2010 calendar year with its investments posting a 12.7 percent return. It marks back-to-back positive calendar year returns and boosts the market value of our investment portfolio to levels not seen since October 2008.

The CalSTRS investment portfolio has rebounded by more than $34.8 billion since March 2009 to its current value of $146.4 billion. This is thanks in part to the efforts of the Teachers’ Retirement Board and CalSTRS staff to position the investment portfolio for continued growth.

Long-term Investing Like a Marathon

As a patient, long-term investor, CalSTRS is like a marathon runner. Our investment outlook spans many years down the road. Any marathoner will tell you that one good mile does not guarantee a successful race.

Even with the recent solid returns, after the historic worldwide economic crash, we still can’t count on investment returns alone to restore CalSTRS to healthy long-term funding. After the crash, we estimated it would take five consecutive years of 20 percent returns to fully fund the CalSTRS benefits already earned. As good as recent returns have been, they haven’t been high enough, and it’s unrealistic to expect them to solve the funding problem.

Both investment returns and contributions comprise the income to pay the benefits. CalSTRS cannot set its own contribution rates and requires action by the Legislature and the Governor to change them. With that in mind, we continue to work with our stakeholders to help the Administration and Legislature develop a strategy that will place CalSTRS on sound financial footings.


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