CalSTRS Reports 9.0 Percent Net Investment Return for FY 17-18
Positive fund performance exceeds 30-year return assumption and reinforces forward progress on funding plan.
“This year we beat the 7 percent goal and exceeded our benchmark.”
Christopher J. Ailman
CalSTRS Chief Investment Officer
WEST SACRAMENTO, Calif. (July 20, 2018) – The California State Teachers’ Retirement System announced that the fund posted a 9.0 percent return (net of fees) for the 2017-18 fiscal year, exceeding the investment assumption of 7.0 percent for the second consecutive year and helping advance the fund towards full funding in the decades ahead. As of June 30, 2018, the total fund value was $223.8 billion.
“This year’s positive investment performance is yet another testament to the long-term sustainability of a well-run pension fund guided by a committed board of trustees and a staff of diverse and talented investment experts,” said Chief Executive Officer Jack Ehnes. “The fiscal year returns are only one part of CalSTRS’ pursuit of long-term value creation. The CalSTRS Funding Plan, passed into law in July 2014, is the overarching model of shared responsibility, working in tandem with the positive return performance generated by the investment portfolio.”
CalSTRS’ returns reflect the following longer-term performance:
“This year we beat the 7.0 percent goal and exceeded our benchmark,” said Chief Investment Officer Christopher J. Ailman. “We will rank high compared to similar funds, but it is only one year. We need to repeat that performance year in and year out, on average, over the next 30 years. No small feat, but our award-winning staff and our complex portfolio are designed to do just that. This is a marathon, not a sprint to the finish line. And, as a large, mature pension system, we must continue to explore, innovate and collaborate to build an efficient, successful portfolio for the long term.”
The fiscal year saw strong double digit returns in both the public and private equity markets with the S&P 500 returning over 14 percent. CalSTRS was positioned well to take advantage of this growth while maintaining a diversified portfolio to provide risk protection through the full allocation to the Risk Mitigating Strategies asset class which was fully implemented during the last 12 months. Given the focus on long-term funding to protect the funds’ value, these strategies are important to avoid losses experienced during market downturns such as the historic 2008 global financial crisis.
CalSTRS Fiscal Year 2017–18 Returns (Net of Fees)
Asset Class and Benchmark Performance Breakdown
|CalSTRS Asset Class/Strategy||10-Yr Return||5-Yr Return||3-Yr Return||Fiscal Year 2017-2018 Return||Fiscal Year 2017-2018 Custom Benchmark Return||Fiscal Year 2017-2018 Over/Under Performance|
|Global Public Equity||7.6%||10.8%||9.2%||11.7%||11.8%||-0.1%|
|Risk Mitigating Strategies||^||0.2%||-2.9%||1.8%||1.7%||0.1%|
|Total Fund Performance||6.3%||9.2%||7.8%||9.0%||8.6%||0.4%|
* Asset valuations and benchmark returns lag by one quarter.
^ Newly funded strategies without 10-year returns.
As of June 30, 2018, the CalSTRS investment portfolio holdings were 53.7 percent in U.S. and non-U.S. stocks, or Global Equity; 12.8 percent in Real Estate; 12.3 percent in Fixed Income; 8.9 percent in Risk Mitigating Strategies; 8.2 percent in Private Equity; 1.9 percent in Inflation Sensitive; 0.8 percent in Innovative Strategies and Strategic Overlay; and 1.4 percent in Cash.
The California State Teachers’ Retirement System, with a portfolio valued at $223.8 billion as of June 30, 2018, 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.
For accessible versions of files on this page, contact ADACoordinator@CalSTRS.com.