CalSTRS to invest $100m in next generation

The California State Teachers’ Retirement System is looking for fund of funds managers to take on a $100m mandate to invest in 'new and next generation' managers.

( In a move sure to cheer first-time fund raisers, the California State TeachersRetirement System (CalSTRS) announced it is looking for one or two fund of funds managers to invest in a $100m portfolio of private equity “new and next generation” managers.

CalSTRS defines new and next generation managers as existing experienced private equity professionals splitting off from their current partnerships or organisations, young partnerships seeking their second institutional fund and experienced private funds or investors seeking institutional funding for the first time.

According to a statement, the firm selected will construct, manage and liquidate a private equity fund of funds portfolio of new and next generation manager partnership investments. The fund of funds manager will have full discretion over the $100m portfolio.

The portfolio the firm will manage will be diversified over time, geography and private equity sub-asset class to include buyouts, equity expansion and venture capital, according to the announcement. The new and next generation managers selected by the fund-of-funds manager may be drawn from a broad range of settings, such as private equity, insurance companies, pension funds and investment banking.

Final filing date for investment offerings is July 7. A copy of the Private Equity Investment Search document is available in the Investments section of the CalSTRS Web site,

CalSTRS, which administers retirement, disability and survivor benefits for California's public school educators in grades kindergarten through community college, serving more than 715,000 members and benefit recipients, is the third largest public pension fund in the U.S.

CalSTRS selected Cambridge Associates as its advisor for its domestic alternative investment program in February, and London-based Altius Associates as its advisor for its international alternative investment allocation program in July last year. The alternative investment allocation of 5.2 per cent of assets is currently valued at $4.6bn with committed values of $8.7bn. The portfolio has generated a 16.2 per cent compounded annual rate of return since its inception in 1988.

The current alternative investment asset allocation – 6 per cent within a portfolio of $95bn – is projected to grow to $11bn by 2006, with the domestic portion expected to reach $9.3bn.