Performance Results

General Information

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

  • 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)

$1.44 Billion Since Inception
December 31, 2015

Securities Lending Program Earnings Bar Graph

When program earnings are compounded at the growth rate of the total Teachers’ Retirement Fund, over $3.04 billion has been generated since inception of the program.

CalSTRS Securities Lending Program Earnings (in basis points)

December 31, 2015

Securities Lending Program Earnings Bar Graph

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:

  • Lower demand to borrow individual securities with large return spreads, often referred to as “super specials.”
  • Lower demand, due to tighter broker/dealer balance sheets impacted by new and potential regulations.
  • An overall decline in dividend related trades in the international equity market.