Performance Results

General Information

By policy, the program objective for the CalSTRS Securities Lending Program is to achieve lending income commensurate with both:

  • The market demand for the securities made available for lending.
  • The return earned on the investment of the cash collateral within the program guidelines set forth by CalSTRS.

CalSTRS Securities Lending Program Earnings (in millions)

$1.35 Billion Since Inception
December 31, 2014

2014 earnings were $91.8 million. From 2010-2014, program earnings averaged $101 million per year.

When program earnings are compounded at the growth rate of the total fund, over $2.91 billion has been generated since inception of the program.

CalSTRS Securities Lending Program Earnings (in bps)

December 31, 2014

4.61 bps on average since inception

Although securities lending is not one of the core functions within the Fixed Income unit, it has been viewed as a valuable source of steady incremental income to the entire fund.

Over four basis points every year, on average, since inception of the program.

Contributing Factors

Two factors contribute to the net income of the program:

  • The negotiated lending terms at the outset of the loan.
  • The return generated from the management of the cash taken as collateral for the loan.

Three factors that have negatively affected recent earnings are:

  • Increased lendable supply from new entrants in the marketplace.
  • Lower demand due to tighter broker/dealer balance sheets impacted by potential regulations.
  • Reduced cash collateral yields.