CalSTRS in search of alternatives consultant(2)

The California State Teacher’s Retirement System began the search after shifting its focus from fixed income assets to alternatives assets late last year.

The California State Teachers’ Retirement System (CalSTRS) has started a search for an alternative investments consultant following the expiration of its current contract with McKinsey & Co.

The consultant will advise and recommend the CalSTRS Investment Committee on its strategies, policies and practices, CalSTRS said in a statement. The filing deadline for proposals is March 30. The final decision is expected by July 1.

CalSTRS significantly expanded its target allocations to alternative investments, including private equity and real estate, in September. The pension fund moved to what it views as a higher risk, higher return asset mix in order to meet its long-term funding gap of about $20 billion. Its alternative investments, including private equity and hedge funds, increased from a six percent target to nine percent.

In making the transition from a traditional fixed income assets to the more aggressive ones, CalSTRS began looking for investment management firms to help in October.

Established in 1988, CalSTRS’ investment portfolio is the second largest public pension fund in the US. It is valued at approximately $158 billion (€119 billion) and provides retirement, disability and survivor benefits to 800,000 California public school educators and their families. The alternative investment portfolio includes limited partnerships, co-investments and secondary interests of limited partnerships. The limited partnerships account for 94 percent of the portfolio, the statements aid. About six percent, or $9.5 billion, of its assets were allocated to private equity at the end of January.