CalSTRS commits $200 million to private equity

The system has committed to two fund of funds focused on emerging managers.

The California State Teachers’ Retirement System has approved $200 million in private equity commitments to two fund of funds, according to meeting documents. 

CalSTRS will commit $100 million to Chicago-based Muller & Monroe Asset Management, a new relationship for the system, and $100 million will go to BAML Capital Access Funds Management, a subsidiary of Bank of America. Both commitments come from CalSTRS’ Private Equity Proactive Portfolio, which was established in 2003 to focus on small, niche emerging managers including those in under-served domestic markets. So far, commitments from this portfolio have totaled $1.9 billion. 

Muller & Monroe’s M2 Private Equity Fund of Funds II has a $400 million target and focuses on emerging domestic markets, including funds that are managed by newer and next-generation managers and by seasoned investors focused on a specific niche or theme found in the lower-middle market. CalSTRS’ commitment to BAML marks the fourth time the system has committed to BAML fund since 2003. BAML targets underserved domestic markets. CalSTRS has the option of increasing its commitment to $200 million or more in the future.  

Earlier this month, CalSTRS adopted a dual-consultant arrangement aimed at improving research and providing broader opinions on key investment issues and decisions. The system hired Meketa Investment Management as co-consultant alongside lead consultant Pension Consulting Alliance. Both companies will monitor and comment on asset allocations and participate in the tri-annual asset allocation study due in 2015. 

CalSTRS’ total portfolio was valued at $180.8 billion as of 28 February.