CalSTRS Adopts Inaugural Set of Investment Beliefs
Investment beliefs create a framework to guide investments in a complex marketplace
WEST SACRAMENTO, Calif. (February 7, 2018) – The California State Teachers’ Retirement System today adopted Investment Belief #8, thus completing its first-ever set of investment beliefs to provide overarching guidance on CalSTRS’ investment decisions across its portfolio asset classes.
The beliefs create a framework for investment policies pertaining to the alignment of financial interests with its external advisers. The set of eight beliefs also clarify the basis for making individual investment decisions and for evaluating the overall investment program.
The adopted beliefs include:
- Benefits of a diversified investment portfolio.
- Recognition that global public investment markets are not completely efficient.
- Long-term benefits of managing investment costs.
- Critical capability of internal investment management.
- Potential to capture an illiquid risk premium.
- Ability to meet long-term financial obligations through managing short-term drawdown risk.
- Benefits of responsible corporate governance including managing environmental, social governance factors.
- Alignment of financial interests between CalSTRS and its advisers.
“There’s a passion and vibrancy shared by the board to use the broad discretion afforded to us by constitutional and statutory provisions to set forward-looking policies and investment strategies as we aim to grow and protect the portfolio,” stated Teachers’ Retirement Board Investment Committee Chair Harry Keiley. “The work we’ve completed and the topics we’ve deliberated upon to develop these beliefs are a true testament to the commitment our board members assume as part of their roles and responsibilities as trusted fiduciaries of the Teachers’ Retirement Fund.”
The investment belief development process began with a peer review in late 2015. Over the next two years, the Investment Committee discussed and debated belief options. The process also included input from various stakeholders.
“These investment beliefs are a down-to-earth foundational framework we can look to as we make strategic investment decisions.”
Christopher J. Ailman
CalSTRS Chief Investment Officer
“While these beliefs will not change the manner in which the portfolio is invested, they provide transparency into how CalSTRS invests its assets,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “They serve as a guiding light to the Board and staff—now and into the future—to ensure continuity with our mission to secure the retirement future for California’s educators. These investment beliefs are a down-to-earth foundational framework we can look to as we make strategic investment decisions in an increasingly complex, global market.”
Mr. Ailman continued, “As a well-respected global investor, it’s imperative that CalSTRS continue to be a force for what’s good and right for long-term value creation, for the sake of today’s and future generations of California’s educators.”
The California State Teachers’ Retirement System, with a portfolio valued at $225.3 billion as of December 31, 2017, is the largest educator-only pension fund in the world. CalSTRS serves California’s more than 933,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts. A hybrid retirement system, CalSTRS administers a combined traditional defined benefit, cash balance and voluntary defined contribution plan. CalSTRS also provides disability and survivor benefits. CalSTRS members retire on average after more than 25 years of service, with a median retirement age of 62.9, and a monthly pension of approximately $4,475, which is not eligible for Social Security participation. For more data, download the CalSTRS Fast Facts 2017 brochure.
See how CalSTRS demonstrates its strong commitment to long-term corporate sustainability principles in its annual Global Reporting Initiative sustainability report: Global Stewardship at Work