CalSTRS Set to Bring More Assets In-House

The California State Teachers’ Retirement System (CalSTRS) announced the completion of its Investment Branch leadership restructuring.

Debra Smith has been named CalSTRS chief operating investment officer (COIO). Glenn Hosokawa was named director of the $22.4 billion asset class, Fixed Income, the CalSTRS funds’ second largest. Paul Shantic was named director of Inflation Sensitive, the newest and smallest asset class with an investment portfolio at $1.4 billion.

“These three appointments, coupled with our 2010 creation of a deputy chief investment officer, complete a new organizational structure that allows us to bring more assets in-house,” says CalSTRS Chief Investment Officer Christopher J. Ailman. “This structure matches what you find in most large investment money managers. This also fits our plans to internally manage more of our assets—currently at 45% in-house—to a projected 60% internally managed.”

All three new appointments moved up from high-level positions in CalSTRS. Smith was director of investment operations. Hosokawa and Shantic were acting co-directors of Fixed Income.

The new structure has the COIO overseeing Investment Operations, Branch Administration, and a new unit comprised of Compliance, Internal Controls, Ethics and Business Continuity. The new position will also directly report to the Investment Committee twice per year. This fulfills a goal of CalSTRS’ internal auditors, who recommended the separation between investment management and investment operations.

CalSTRS, with a portfolio valued at $186.4 billion as of September 30, 2014, is considered the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. It also provides disability and survivor benefits. CalSTRS serves California’s 868,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.