CalSTRS Seeks CIO – See You In September?

May 19, 2000 ( - Confronted with the same issues as its larger California cousin, the California State Teachers Retirement System (CalSTRS) is following in the footsteps of CalPERS on its Chief Investment Officer search but is not - yet - taking CalPERS's recent asset allocation moves to heart.

Despite an aggressive deadline of September 2000, CalSTRS – the nation’s third-largest pension fund with $114 billion in assets – has not yet engaged a search firm to replace departing CIO Patrick Mitchell. But the fund has decided to use the same search firm as the California Public Employees Retirement System (CalPERS), the largest public pension fund with $174 billion in assets.

A Better Alternative

CalSTRS’ Information Officer Sherry Reser said, “The board voted on May 4 to use the same firm as the California Public Employees Retirement System (CalPERS) is using for their search. They’re figuring some candidates in the CalPERS search might be more interested in working for CalSTRS. This would assist in meeting our aggressive deadline.” Mitchell is scheduled to leave his post July 15.

CalPERs spokesman Brad Pacheco will not release the name of the search firm they are using to replace their Chief Investment Officer “for another couple of days.”

Asset mix stable

While CalPERS just announced an asset allocation shift of two percentage points from mainstream equities and cash into alternative investments, CalSTRS asset allocation mix was reviewed in July last year. No changes were recommended at that time. The next CalSTRS review will take place in 2001. “Within our asset allocation’s classes, our staff and CIO do have some discretion,” clarified Reser. CalSTRS’ alternative investments target is 5%, with a tactical range of 3% to 7%. CalPERS has just established a 6% committment to alternative investments, up from 4%.

Reser said CalSTRS has been following the suggested emerging markets screens that California State Treasurer Phil Angelides has put before the CalPERS board. “This had been brought before our investment committee last November,” stated Reser. “The existing benchmark was affirmed, and the committee voted that in July, 2000 it would decide if the emerging markets issue would be included for study in the next fiscal year.”

Angelides has proposed that stocks from publicly traded companies based in

  • Brazil
  • Egypt
  • Indonesia
  • Malaysia
  • Peru
  • Turkey

would no longer be eligible for California state fund investments. Angelides sits on the boards of both CalPERS and CalSTRS.