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Board adopts new long-term asset allocation

The Teachers’ Retirement Board adopted a new long-term asset allocation with the intent of further strengthening CalSTRS’ portfolio during these uncertain economic times.

At the May 4, 2023, meeting, board members were reminded that CalSTRS has faced turbulent economic times before, and the new Asset Liability Management study, which took nearly a year to complete, takes into consideration how to best position CalSTRS to meet its future obligations.

Staff recommended slight reallocations of assets to further diversify the portfolio and enhance the long-term sustainability of the fund. The proposals included reducing the stock portfolio by 4%, increasing the Fixed Income Portfolio by 2% with an expansion into private debt, and increasing the Private Equity and Inflation Sensitive portfolios by 1% each.

With its increased diversification, the new allocation is expected to offer similar returns while reducing risk.

CalSTRS undertakes an Asset Liability Management study every four years through a process designed to determine how best to invest the assets to fund the pension benefits owed to CalSTRS members.