Slideshow: CalSTRS Top 10 Performing Funds
Imagine committing $500 million to 10 private equity and venture capital funds, seeing $444 million drawn down, then kicking back and relaxing as more than $1.8 billion funnels back from your able general partners over the next several years. Such has been the good fortune of the California State Teachers' Retirement System--if you count only the top 10 investments it ever made in the asset class, out of some 249 funds backed since 1989. Those top 10 have generated a 4.2x cash-on-cash return, by our count, and that doesn't include the value of remaining holdings (which CalSTRS doesn't disclose in its Sept. 30 2010 performance numbers). All told, our calculations show CalSTRS achieving a median IRR of 8.0 percent on its vintage-2006 and older collection of 182 funds as of Sept. 30. Breaking into the top-quartile meant hitting about a 16.5 percent IRR, while generating a -0.71 percent IRR or worse landed you in the bottom quartile. In other words, CalSTRS has so far lost money, on paper, on more than one in four of those funds--a far cry, no doubt, from what their managers promised. As for the top 10, shown in the slideshow below, mid-1990s venture funds are well-represented, as you would expect. But a subordinated debt fund? An opportunities fund from a certain distressed debt specialist expected to go public shortly? Both there as well.
