The California State Teachers’ Retirement System (CalSTRS) Investment Committee has voted to make a subtle shift in the long-term asset allocation targets of its $170 billion investment portfolio. The decision caps a year-long asset and liability study, which examined the risk and return profiles affecting the investment portfolio.
The new asset allocation reduces the largest asset classes, such as Global Equity, from 53 to 51 percent and Fixed Income from 20 to 16 percent. The illiquid asset classes, consisting of Real Estate and Private Equity, saw their allocation edge upward by 1 percent respectively.
“Strategic asset allocation is the single most important factor in determining the overall rate of return for investments over the long term,” said CalSTRS Chief Investment Officer Christopher Ailman. “By adopting this long-term asset mix, the committee reaffirms the plans we established after the financial crisis of 2008. To date, our performance–in the top 14th percentile over three years–demonstrates it’s been a good approach.”
Full plans for implementing the new asset allocation will be developed in the coming months and will take at least another three years to execute.
“These are studies we conduct every three years and this was a critically important one, examining the effectiveness of our response to the global financial crisis of 2008-09,” said CalSTRS Investment Committee Vice Chair Sharon Hendricks. “This study was invaluable in familiarizing our board members with the elements and dynamics of our portfolio. Our examination of the market allows us to adapt and to coax consistent long-term growth from a chaotic environment.”
The California State Teachers’ Retirement System is the largest teacher pension fund and second largest public pension fund in the United States (www.calstrs.com).
© 2013 PEPD • Private Equity’s Leading News Magazine • 9-11-13