CalSTRS Expands Alternative Investment Partnerships Into Additional International Markets
Sacramento, CA – The California State Teachers’ Retirement System is expanding its alternative investment program by increasing the geographic scope of its partnerships.
At the regularly scheduled June meeting of the Teachers’ Retirement Board, the Investment Committee voted to expand its geographic locations for alternative investments to the entire globe. Prior to this action, the policy was limited to the United States, Canada, the United Kingdom and Western Europe.
“An independent analysis of the worldwide private equity activity, by McKinsey & Company, shows CalSTRS’ traditional geographic focus encompassed 93 percent of the market. And we’ve been successful there, with an 18.4 percent return over 10 years,” said Christopher J. Ailman, CalSTRS chief investment officer. “As the private equity universe expands to the globe, we want the ability to take advantage of additional international markets on an opportunistic basis where we’ll expect higher returns, given the higher risk.”
The alternative investment portfolio represents 4.8 percent of the total $113.2 billion investment portfolio. The current market value of the international alternative investment portfolio is $974 million with committed values of $1.9 billion. The entire alternative investment portfolio has a market value of $5.4 billion; including unfunded commitments, the portfolio’s value is $10 billion.
Existing advisors will broaden their duties: Cambridge Associates will be responsible for the Far Eastern and Latin American markets, in addition to the U.S. and Canada; Altus Associates will be responsible for the Eastern European and Middle Eastern markets, in addition to the United Kingdom and Western Europe.
CalSTRS is the third-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s public school teachers from kindergarten through community college, serving more than 735,000 members and their families.