CalSTRS PE return smashes benchmark

The asset class was second only to global public equity in terms of performance for the year ended 30 June.

The California State Teachers’ Retirement System saw its private equity portfolio return 17.2 percent in the fiscal year ending 30 June.

The pension system said private equity, which comprised 8.1 percent of CalSTRS portfolio, significantly exceeded its 12.6 percent benchmark. The asset class was second only to global public equity in terms of performance.

CalSTRS, which managed $208.7 billion as of 30 June, generated a 13.4 percent rate of return overall.

“Just as one bad year will not break us, one good year won’t make us,” said chief investment officer Christopher Ailman. “We intentionally keep our eyes focused on a 30-year horizon and make our adjustments with that timeframe in mind, rather than reactively responding to any given situation at hand.”

On Twitter, Ailman praised CalSTRS’ overall returns, noting the pension system outperformed its larger peer, the California Public Employees’ Retirement System. CalPERS’ $323 billion portfolio returned 11.2 percent for the year ending 30 June and its private equity portfolio returned 13.9 percent.

CalSTRS is considering a change to the makeup of its private equity portfolio, according to materials for its 7 June board meeting. The proposals included the introduction of new sub asset classes of core private equity, which would come with potentially longer hold periods and more attractive fee terms.