CalSTRS Seeks Transition Managers

News release

Sacramento, CA – The California State Teachers’ Retirement System today launched a search for one or more investment management firms with experience in transition management to act as fiduciaries in transactions that may include portfolio liquidation, asset allocation changes and portfolio rebalancing. The final filing date for proposals is November 14 with selections expected in the spring of 2007. 

The contract awards will establish a pool of investment management firms to provide transition management services, which may involve multiple asset classes and multiple managers with domestic and international mandates across all capitalization ranges, styles and regions.

“We are at the inception of an unprecedented change in our portfolio,” said Christopher J. Ailman, CalSTRS chief investment officer. “These managers will be instrumental in our long-term asset allocation strategy to shift assets from fixed income to more aggressive blended investments that fall somewhere between our private equity and real estate asset classes.”

The long-term targets, approved at the Teachers’ Retirement Board meeting in September, shift 6 percent of the portfolio from Fixed Income and 1 percent each from U.S. Equity and Cash. The real estate portfolio will see the largest increase at 5 percentage points; alternative investments will receive a 3 percentage point increase. In the current $144 billion portfolio, these shifts would be approximately $11.5 billion.

The selected firms will have full control to manage, acquire, dispose of assets and coordinate the entire transition process on any portion of the portfolio as determined by CalSTRS. Since transition manager(s) will serve as fiduciaries to the system, they will be expected to coordinate the process in the most cost effective manner and to minimize or eliminate any loss to the fund.

 With a $146 billion investment portfolio, the California State Teachers’ Retirement System is the second-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s 776,000 public school educators from kindergarten through community college.