New Alternative Investment Consultant Structure for CalSTRS

News release

Sacramento, CA – The California State Teachers’ Retirement System seeks consultants for a new governance structure in its alternative investment portfolio. Two requests for proposals were issued February 8, with final filing dates of April 5. The RFPs are available on the CalSTRS Web site at www.calstrs.ca.gov.

“We’re dividing the consultant functions to create a structure that will position us for future growth in the AI portfolio,” said Christopher J. Ailman, CalSTRS chief investment officer. “With the recent increase in the alternative investment asset allocation from 5 percent to 8 percent, we’re likely to have a $12 billion AI portfolio by 2006.”

One RFP is for a single consultant to work closely with the Investment Committee to monitor and comment on the AI portfolio performance and policy. The investment committee consultant will not review specific transactions.

The other RFP will establish a pool of up to eight consultants to serve as gatekeepers, advisors and independent fiduciaries. These consultants will screen available alternative investment opportunities, perform due diligence on prospective investments and assist and advise the CalSTRS staff.

The RFPs are being issued because the current general AI portfolio consultant contract with Pathway Capital Management LLC is expiring.

The CalSTRS investment portfolio, at $100.8 billion, is the third largest pension fund in the nation. At year’s end, the alternative investment portfolio had market value of $4.4 billion, with committed values of $8.8 billion. The AI portfolio contains direct and co-investments, limited partnerships and secondary interests. It has generated a 23.1 percent compounded annual rate of return since its inception in 1988.

CalSTRS administers retirement, disability and survivor benefits for California’s public school educators in grades kindergarten through community college, serving approximately 687,000 members and benefit recipients.


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