CalSTRS makes $4.8bn in commitments in H1 2020

The US pension has increased its pace of co-investments and added opportunistic debt.

Institution: California State Teachers’ Retirement System
Headquarters: Sacramento, United States
AUM: $242.8 billion
Allocation to private equity: 9.77%

California State Teachers’ Retirement System has made $4.8 billion in commitments across 36 private equity vehicles, according to its September 2020 investment committee meeting documents. CalSTRS has also increased its co-investment pace and added debt strategies to exploit distressed opportunities created by market dislocation. The pension needs to continue its strong pacing commitment to achieve its long-term target allocation of 13 percent.

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Highlights from CalSTRS’ September 2020 investment committee meeting documents:

  • As of 31 March 2020, the value of the LP’s private equity portfolio was approximately $23 billion, constituting 10.2 percent of the its entire investment portfolio. The pension’s private equity portfolio exceeded benchmarks over the trailing 1-year and 3-year periods but under-performed over the 10-year period.
  • The buyout strategy accounted for 72 percent of the private equity portfolio’s market value, while the portfolio’s highest exposure is to the IT sector (28 percent).
  • CalSTRS’ five largest active managers account for 92 investments, which represents 27.1 percent of its private equity portfolio. The pension’s largest manager is The Blackstone Group with 31 investment vehicles, accounting for 12.6 percent of the private equity portfolio.
  • Co-investments account for 7 percent of the LP’s private equity portfolio. It is expected to boost its co-investment exposure over time. Co-investments outperformed fund investments over 1-year, 3-year and 5-year periods. However, fund investments performed better on a 10-year and since-inception basis.

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CalSTRS’ private equity portfolio is historically diversified across strategies, sectors and geographies. However, based on investment committee documents, approximately 70 percent of its H1 2020 commitments have been to buyouts or buy-related co-investments across North America and Europe primarily.

Christopher Ailman is CalSTRS’ chief investment officer. According to his LinkedIn profile, he leads 120 investment staff across eight teams. Prior to joining the institution in 2000, Ailman served as the chief investment officer at another public pension, Washington State Investment Board. Margot Wirth is the director of private equity and has been at the pension since 2001. The pension’s private equity consultant is Meketa Investment Group.

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