Teachers’ Pension Seeks Firms to Manage Enhanced Index Portfolio
Sacramento, CA – The California State Teachers’ Retirement System today launched a search for up to six fund managers for the enhanced index portion of its domestic equity portfolio. The final filing date for proposals is November 10 with selections expected in the spring of 2006.
“Enhanced index strategies offer an ideal way to generate higher returns without significantly increasing risk,” said Elleen Okada, CalSTRS Director of Global Equities and Operations. “Enhanced indexing is neither active nor passive management so we get the best of both strategies while adding value to our bottom line.”
The CalSTRS enhanced index managers will seek a moderate return over a stated index, such as the S & P 500 or a Russell index. The firms selected through this competitive process will have full discretion to manage their mandates utilizing stock-based strategies, derivative-based strategies or a combination of both.
In addition to awarding one or more contracts, CalSTRS may also use this process to establish a pool of qualified investment management firms as replacements or additions in the future.
This request for proposal is the culmination of a 2003 CalSTRS Investment Committee decision to increase the active management portion of the domestic equity asset allocation from 20 percent to 30 percent. Enhanced index management, which is included in active management, currently totals $3.7 billion within the $57.8 billion domestic equity portfolio. The domestic equity portfolio allocation is 41 percent of the total investment portfolio.
At $133 billion, CalSTRS is the third-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s educators from kindergarten through community college, serving more than 755,000 members and their families.