CalSTRS Issues First Diversity in Investment Management Report to Legislature
The report will be filed annually as part of Senate Bill 294
WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System (CalSTRS) today submitted its first report to the California Legislature outlining progress in bringing emerging managers into the stewardship of its investments.
The report, “,” is a requirement under Senate Bill 294, which became law in 2011. It nonetheless reflects CalSTRS’ strategic goal, since 2003, to bring greater diversity to its external investment management.
“Reflecting the philosophy of inclusion ingrained in the work and the ranks of California’s educators, CalSTRS seeks to increase the participation of emerging investment managers, while enhancing returns at a prudent level of risk,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “That diversity mindset extends to our 108-strong CalSTRS investment staff, comprising wide-ranging backgrounds and experience.”
CalSTRS’ strategic goals on diversity fall into three broad categories:
- CalSTRS investment staff.
- The challenges identified in the “four pillars” of real estate, corporate governance, global equity and brokerage services.
- CalSTRS’ foundation of existing programs.
CalSTRS employs four initiatives aimed at increasing the diversity of its investment staff. They are the development of recruitment strategies to attract a diverse workforce; development of training programs to facilitate hiring recent California university graduates; creation of staff training and development programs to retain staff and attract civil servants from other disciplines; and maintenance of internship programs with surrounding universities.
The four pillars—real estate, corporate governance, global equity and brokerage services—present some of the toughest challenges to incorporating diversity in the management of investments across the CalSTRS portfolio. CalSTRS focuses on meeting four goals. They are:
- Increase the diversity of real estate external managers handling CalSTRS funds.
- Increase the diversity of corporate boards of directors.
- Develop a direct relationship program with equity managers to move managers from the CalSTRS Developing Manager Program to CalSTRS’ core portfolio.
- Increase the diversity of firms providing brokerage services to CalSTRS.
The report also sets out the foundations of CalSTRS’ focus on diversity through its existing programs, which are:
- The Private Equity Proactive Portfolio.
- The Global Equity Developing Manager Program.
- Fixed Income direct relationships with diverse managers.
- Local community college internships.
- Active participation in industry organizations.
“However we approach our goals, we keep in mind the CalSTRS core value of strength, which says, ‘We ensure the strength of our system by embracing the diversity of ideas and people,’” Mr. Ailman said. “It’s why we continue to be recognized as an industry leader. We don’t rest on our laurels, and developing new, diverse and talented asset managers is a key part of our strategic plan.”
CalSTRS’ leadership in diversity is award-winning and has been recognized with several recent accolades, including:
- November 2013 – CalSTRS received the Association of Asian American Investment Managers Champions award.
- November 2012 – New America Alliance Pension Leadership Award for Promoting Latino Advancement, presented to Solange Brooks of CalSTRS Investments Executive Unit.
- April 2012 – CalSTRS Corporate Governance Investment Officer Aeisha Mastagni was awarded the aiCIO magazine’s “Top 40 under 40” award.
The California State Teachers’ Retirement System, with a portfolio valued at $176.2 billion as of January 31, 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.