CalSTRS Adopts Co-Consultant Investment Committee Structure
Two firms offer the Investment Committee greater breadth of opinion

News release Ricardo Duran

WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System (CalSTRS) Investment Committee today adopted a dual-consultant arrangement designed to improve research and provide broader opinions on key investment issues and decisions.

Today the committee named Pension Consulting Alliance (PCA) as lead and Meketa as the co-consultant.

In December 2013, the Investment Committee selected as their consultants PCA and Meketa Investment Group from a field of four, completing a competitive Request for Proposal (RFP) process. The Committee then asked staff to develop a lead and co-consultant model with a specified scope of duties for each role. 

The total scope of duties outlined in the RFP remains the same; however, the exact division of duties is now shared between the companies.

PCA’s duties include:

  • Full service comprehensive general investment consulting.
  • Participation in the tri-annual asset allocation study (due in 2015).

Meketa’s duties include:

  • Research and analysis on two major Investment Committee projects each year.
  • Monitor and comment on the fund’s strategic asset allocation.
  • Participation in the tri-annual asset allocation study (due in 2015).

“We believe this gives the CalSTRS Investment Committee access to different points of view and perspectives to help the Board and our investment staff navigate the complex, volatile and interlinked global financial markets,” said Investment Committee Vice Chair Sharon Hendricks. “This arrangement provides us with a valuable second opinion on our major investment decisions and policies that guide the management of our $180 billion investment portfolio.”

PCA has been the Investment Committee’s general investment consultant since 1989. Details of the division of duties are available on the CalSTRS website.

CalSTRS investment staff will now negotiate contracts with the two firms. The contract terms will be for three years with two one-year extension options.

The California State Teachers’ Retirement System, with a portfolio valued at $180.8 billion as of February 28, 2014, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California’s 868,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.