U.S. Alternative Investment Advisors Sought by CalSTRS

News release

Sacramento, CA – The California State Teachers’ Retirement System seeks program advisers for U.S. partnerships in its alternative investment portfolio. A request for proposal was issued September 17 and the proposals are due October 21. A copy of the RFP is posted on the CalSTRS Web site at www.calstrs.ca.gov.

“Having program advisors focused solely on opportunities in the U.S. will help us prepare for the growth we expect in the AI portfolio,” said Christopher J. Ailman, CalSTRS chief investment officer. “The geographic specialization we’ve built into the AI advisory function means more meaningful expertise and experience for this important part of our overall investment strategy.”

Up to two program advisors will be selected through this competitive process. The successful firms will recommend U.S. alternative investment partnerships, perform due diligence on prospective partnerships and assist and advise CalSTRS staff on those investment opportunities.

This RFP completes the alternative investment consulting roster created with the contract expiration of the current general AI portfolio advisor, Pathway Capital Management LLC. From previous competitive processes, an Investment Committee consultant and a European partnership advisor have already been selected.

CalSTRS’ domestic AI portfolio is currently valued at $3.6 billion with committed values of $7.3 billion. The total AI portfolio, including investments in Canada, the United Kingdom and Continental Europe, has a market value of $4.4 billion with committed values of $8.8 billion within CalSTRS’ $92.6 billion investment portfolio.

The AI portfolio has generated a 20.4 percent compounded annual rate of return since its inception in 1988. Last October, the CalSTRS Investment Committee increased the alternative investment asset allocation from 5 percent to 8 percent. Projections estimate the AI portfolio will grow to $11 billion by 2006, with the domestic portion expected to reach $9.3 billion. The AI portfolio contains direct and co-investments, limited partnerships and secondary interests.

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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