News release

CalSTRS Beats its Benchmark Despite a Troubled Market
The investment portfolio's 3.7 percent loss is the first in six years.

 SACRAMENTO, CA  – California State Teachers’ Retirement System (CalSTRS) investments took a 3.7 percent hit in the fiscal year ending June 30, 2008. Even with its first loss in six years, CalSTRS outperformed its benchmark, which dipped 3.8 percent.

The news from the $162.2 billion fund comes amid the gloom of a 5 percent average loss for public pensions, according to Merrill Lynch analysts.

“Despite troubled economic times, especially in the equities markets, our portfolio continues to provide long-term stability for our members financial futures,” said CalSTRS Chief Executive Officer Jack Ehnes. “The expertise of our investment staff will guide us through this down market and position us to rebound quickly as economic conditions improve.”

Following four straight years of double-digit growth, CalSTRS’ investment portfolio, while posting a loss, showed positive returns in three of its five investment asset classes.

Returns by asset class were as follows:

  • Private Equity’s 11.6 percent growth beat its 4.9 percent benchmark.
  • Real Estate grew 11.8 percent, falling short of its 13.6 percent benchmark.
  • Fixed Income returns showed growth of 6.1 percent, shy of its 6.7 percent benchmark.
  • Non-U.S. Equities fell 5.8 percent, beating the 6.7 percent loss in its benchmark.
  • U.S. Equities dropped 13.4 percent, underperforming its benchmark, which posted a 12.8 percent loss.

“I look at single-year returns as a one-mile measurement within a marathon. It’s a long race and we’ve just had a slow mile. Over the last three and five years we exceeded our goal,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “Diversification is the hallmark of our long-term investment strategy, and it has served us well in the worst of times.”

Despite the single-year loss, the longer term returns continue to exceed the 8 percent average return necessary to meet projected benefit obligations to the system’s 813,000 members. CalSTRS’ return over three years is 9.7 percent and over five years is 11.5 percent.

Following four straight years of double-digit growth, CalSTRS’ investment portfolio, while posting a loss, showed positive returns in three of its five investment asset classes.

Established 95 years ago, the California State Teachers’ Retirement System, with a $164 billion portfolio, is the second-largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California’s 813,000 public school educators and their families from the state’s 1,400 school districts, county offices of education and community college districts.


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