CalSTRS Rebounds with Double-Digit Returns
12.2 percent return a positive note, but 2008 declines still impact portfolio.
WEST SACRAMENTO, CA– The California State Teachers’ Retirement System (CalSTRS) investment portfolio posted a solid 12.2 percent return at the end of the 2009-10 fiscal year.
The CalSTRS investment portfolio’s market value at fiscal year’s end was $129.77 billion. The 12.2 percent return rate beat the actuarial rate of 8 percent and brought in more than $10 billion as the 2009-10 fiscal year ended on June 30.
However, because CalSTRS bases its investment portfolio performance on a three-year rolling average, the last two years’ losses of 25 percent and 3 percent, still have an effect.
“We’ve taken steps to position the portfolio for long-term growth, but we’re not out of the woods yet,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “The American economy suffered a near-death experience in 2008, and it’s going to take some time to fully recuperate from that. This year’s performance is a solid start along that road to recovery.”
The CalSTRS Board and investments staff have positioned the fund for ongoing recovery by:
- Expanding its target asset ranges to avoid having to sell at a loss.
- Temporarily shifting 5 percent of the portfolio from global equities to fixed income, real estate and private equity to take advantage of the distressed market.
- Permanently shifting 5 percent of the portfolio from global equities to create a new absolute return asset class for inflation-protection.
- Adopting a new asset allocation mix to further diversify the portfolio and reduce its stake in the global stock market.
- Launching the Innovations and Risk unit to explore new investments such as a macro global hedge fund strategy, commodities and microfinance.
Returns by asset class were: 14.5 percent for global equities (U.S. equities posted 15.7 percent, non-U.S. 12.1 percent), fixed income at 12.3 percent, private equity with 21.7 percent, and real estate with -12.4 percent.
As of June 30, 2010, the portfolio holdings were: 51.7 percent in U.S. and non-U.S. stocks, 22 percent in fixed income, 14.5 percent in private equity, 10.1 percent in real estate, 0.9 percent in absolute return assets and 0.8 percent in cash.
The California State Teachers’ Retirement System is the second largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California’s 848,000 public school educators and their families from the state’s 1,400 school districts, county offices of education and community college districts.