Investors

CalSTRS GPs divided over fee disclosure

The pension has to ask funds it invested in before 2017 if it can make their fees and expenses public, and almost half said no.

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Almost half of the funds the California State Teachers’ Retirement System made commitments to before 2017 declined to make public what they charged the pension.

California’s public pension plans are required by state law to disclose fee and expense information for contracts and new capital commitments made after 1 January 2017. Pension systems are also obliged to make reasonable efforts to obtain and release fee and expense information from funds which received commitments before 2017.

CalSTRS asked fund managers for information on commitments to 340 alternative investment vehicles made before 1 January 2017. It received authorisation from 180 funds to disclose the information, while 160 funds did not give the pension permission to make their costs public, staff said at an 8 May meeting.

Staff received fee information for all 64 investments made on or after 1 January 2017.

Last year, the first under the AB 2833 disclosure law, the pension only published information on to the 22 new commitments the pension system made between 1 January and 30 June, 2017.

At the time, staff said it had asked general partners for information on 353 funds, but the responses were limited and the data had several inconsistencies. There were also issues over proper authorisation to release the data to the public, documents said.

In the most recent report, data are also inconsistent across GPs. Most did not provide gross internal rate of return numbers for their funds.

Several GPs – including ACON Equity Partners, Energy Capital Partners, GGV Capital, Interwest Partners and Providence Equity Partners – did not provide carried interest amounts for their funds.

Others such as Advent International, Carlyle Group, Castlelake, CVC Capital Partners, and Onex did not provide information on all their funds.

The AB 2833 reporting process was manually intensive, and staff used a consultant to help with this effort, according to meeting documents.

In 2017, external management for private equity cost CalSTRS $364 million, including $234 million in management fees, $13 million in operating expenses, and $116 million in other expenses, according to CalSTRS documents.