Flat CalSTRS Returns Reflect Challenging Global Markets

Jul 16, 2012 (PLANSPONSOR.com) - Flat investment returns at the California State Teachers' Retirement System (CalSTRS) reflected the highly volatile and challenging global markets of the 2011-12 fiscal year.

The 1.8% return rate is well below the actuarial assumed rate of 7.5% and 150 basis points below the policy benchmark, the fund’s performance measuring stick. The CalSTRS Investment Portfolio’s market value for the fiscal year ending June 30 was $150.6 billion.

Last fiscal year, CalSTRS posted a 23.1% investment return, preceded by a fiscal year 2009-10 return of 12.2%. CalSTRS has generated a 7.5% return over 20 years.

“This fiscal year has presented a very difficult market for long-term investors like CalSTRS, with wild fluctuations amid ongoing instability in Europe, slowing growth in China and India, a U.S. credit rating downgrade and a sluggish economy,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “The coming year presents us with many of the past year’s challenges. Short-term speculators risk day trades to time the market but large institutional investors are challenged to generate sustainable returns in such an environment.”

As of June 30, the CalSTRS investment portfolio holdings were 49.8% in U.S. and non-U.S. stocks, or global equity; 18.3% in fixed income; 15% in private equity; 14.5 % in real estate; 0.6% in inflation sensitive and overlay assets; and 1.8% in cash.