The total portfolio topped its benchmark by .24, according to a press release. The U.S. equity portfolio’s 17.2% return at year’s end led the resurgence, followed by a 16.9% return in the private equity portfolio. Non-U.S. equity holdings returned 12.8%. All three asset classes beat their benchmarks, as did the fixed income portfolio, with an 8% return. Real estate holdings posted a return of .01%.
Since March 2009, the CalSTRS investment portfolio has rebounded by more than $34.8 billion to $146.4 billion. “While we’ve set the groundwork for a slow but steady recovery, we still have to work through the losses we took in 2008,” said CalSTRS Chief Investment Officer Christopher J. Ailman, in the press release. “Nonetheless, we’re beginning to see the first green shoots of a rebound from the financial crisis.”
The announcement said actions taken by the Teachers’ Retirement Board to position the CalSTRS investment portfolio for growth include:
- Expanding target asset ranges to avoid having to sell at a loss;
- Temporarily shifting 5% of the portfolio from global equities to fixed income, real estate and private equity to take advantage of the distressed market;
- Permanently shifting 5% of the portfolio from global equities to create a new absolute return asset class for inflation-protection;
- Adopting a new asset allocation mix to further diversify the portfolio and reduce its stake in the global stock market;
- Launching the Innovations and Risk unit to explore new investments such as a macro global hedge fund strategy, commodities and microfinance; and
- Examining risk-based asset allocation strategies for the CalSTRS portfolio.
The California State Teachers’ Retirement System is the second largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California’s 852,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.