California Teachers’ Pension Fund Earns 3.4 Percent for the Year

News release

SACRAMENTO—In another sign the economy is on the rebound, the California State Teachers’ Retirement System recorded its first positive portfolio return in three years. The nation’s third largest public pension fund posted a 3.4 percent return, with assets totaling $100 billion, for the fiscal year ending June 30.

“The market turnaround played a big role in our good news. But also our investment staff took decisive action when others were frozen with concern in the face of a bad economy and the start of the war,” said CalSTRS Chief Executive Officer Jack Ehnes. “As a result, we earned an extra $575 million for the fund with our boldness.”

Three of CalSTRS’ five asset classes showed positive returns for the year. Fixed income, 27 percent of the portfolio, continued as the strongest asset class with a 13.2 percent return, up from an 8.5 percent gain last year. Real estate, 5 percent of the portfolio, was up 6.3 percent compared to an 11 percent return the previous year. Not surprisingly, U.S. equity, 41 percent of the total portfolio, showed the biggest improvement, with a 1 percent return compared to a 16.7 percent loss last year.

Even the asset classes with negative returns showed increases over the previous year. Reflecting the continuing decline internationally, non-U.S. equity, 20 percent of the portfolio, showed a 5.1 percent loss, compared to an 8.1 percent loss the year before. The CalSTRS alternative investment portfolio, 5 percent of the total, posted a 3.6 percent loss, compared to an 8.9 percent decline last year. The alternative investments portfolio retains a positive return since its 1988 inception of 16.3 percent.

CalSTRS suffered along with all investors in 2001 and 2002 with respective losses of 9.12 percent and 5.95 percent. Thanks to this year and an earlier six-year run of double-digit positive returns, CalSTRS has a five-year rolling average return of 2.5 percent and 7.5 percent for the 10-year rolling average.

CalSTRS administers retirement, disability and survivor benefits for California’s public school educators in grades kindergarten through community college, serving more than 715,000 members and benefit recipients.