California Teachers’ Pension Fund Earns 18.3 Percent for the Year

News release

Sacramento, CA — The California State Teachers’ Retirement System posted an 18.3 percent return on its investments for the past year. Assets for the nation’s third largest pension fund totaled $110.7 billion on Dec. 31, 1999, a $17.4 billion increase from Dec. 31, 1998.

This is the fifth consecutive year for double digit returns and one of CalSTRS’ best showings compared to most large public pension funds. CalSTRS outperformed 72 percent of public and corporate pension funds with more than $1 billion in assets according to the Trust Universe Comparison Service. The service, which measures relative performance of pension funds, reported CalSTRS’ peer group had a median investment return of 16.61 percent.

“The retirement funds for California’s educators have never been more secure,” said CalSTRS Chief Investment Officer Patrick Mitchell. “These outstanding returns allow us additional flexibility to continue to improve the retirement package for our members.”

The strong performance was primarily driven by the domestic and international stock markets. As of Dec. 31, CalSTRS had 44 percent of its assets in domestic stocks and 27 percent in international stocks. Returns were 22.7 percent and 36.1 percent respectively.

CalSTRS held 23 percent of its assets in domestic bonds, which recorded a -4.1 percent return. Real estate, alternative investments and cash totaled 6 percent of the investment portfolio and had returns of 12.6 percent, 32.0 percent and 5.7 percent respectively.

“One of the best decisions we’ve made was to increase our equity holdings in the portfolio 30 months ago and we’ve reaped the benefits of the excellent stock market performance,” said Teachers’ Retirement Board chair Emma Zink. “However, providence can only carry you so far and then you have to make your own luck. Our investment staff did just that with their hard work and skill in implementing the board’s strategic investment plan.”