U.S. Alternative Investment Advisor Named by CalSTRS

News release

Sacramento, CA – The California State Teachers’ Retirement System has selected Cambridge Associates LLC as its advisor for U.S. alternative investment partnerships. Cambridge Associates will recommend U.S. partnerships, perform due diligence and assist and advise CalSTRS staff on those investment opportunities.

“Cambridge has the experience, philosophy and background we need to continue the excellence of our AI portfolio,” said Real Desrochers, CalSTRS director of alternative investments. “They have an outstanding ability to help us add value to the AI portfolio.”

The selection of Cambridge Associates, done through a competitive process, completes a restructuring of the portfolio’s consulting services begun last year. Earlier, McKinsey & Company was named as overall alternative investment portfolio advisor to the CalSTRS board and Altius Associates was selected to advise on European AI partnerships.

“The geographic specialization we’ve built into the AI advisory service will be an important part of our overall investment strategy,” said Christopher J. Ailman, CalSTRS chief investment officer.

The AI portfolio contains direct and co-investments, limited partnerships and secondary interests. CalSTRS’ domestic AI portfolio is currently valued at $3.7 billion. The total AI portfolio has a market value of $4.3 billion with additional unfunded commitments of $4.4 billion within CalSTRS’ $92 billion investment portfolio.

The AI portfolio has generated a 17.5 percent compounded annual rate of return since its inception in 1988. Projections estimate the AI portfolio will grow to $11 billion by 2006, with the U.S. portion expected to reach $9.3 billion.

CalSTRS, serving approximately 715,000 members and benefit recipients, administers a defined benefit program providing retirement, disability and survivor benefits for California’s public school educators in grades kindergarten through community college.