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CalSTRS Reports 9% Annual Return

CIO Chris Ailman said the fund likely outperformed peers while emphasizing it is “only one year.”

  • By Alicia McElhaney

Double-digit gains in public and private equities benefitted the California State Teachers’ Retirement System over the past fiscal year, new performance data shows.

The pension fund released its 2017-2018 fiscal-year returns on Friday, reporting a nine percent net-of-fees return for the year and beating its benchmark of seven percent. Last year, the fund delivered an annual return of 13.4 percent amid surging equity markets.

“This year’s positive investment performance is yet another testament to the long-term sustainability of a well-run pension fund guided by a committed board of trustees and a staff of diverse and talented investment experts,” said CalSTRS chief executive officer Jack Ehnes in a statement. 

As for many pension funds, including the California Public Employees’ Retirement System, investing in private assets has been a boon for CalSTRS. 

[II Deep Dive: Infrastructure Investments Drive CalPERS’ Returns]

The pension fund’s private equity strategy returned 13.8 percent for the year, while its real estate strategy delivered 10.4 percent gains. Both beat benchmarks. 

CalSTRS chief investment officer Chris Ailman emphasized that the fund is focused on improving its thirty-year performance, rather than basking in the glow of strong annual returns.

“We will rank high compared to similar funds, but it is only one year,” Ailman said in a statement. “We need to repeat that performance year in and year out, on average, over the next 30 years. No small feat, but our award-winning staff and our complex portfolio are designed to do just that.”

As of June 30, the $223.8 billion pension fund had a 25-year annualized return of 7.7 percent after fees.

“This is a marathon, not a sprint to the finish line,” Ailman said in a statement. “And, as a large, mature pension system, we must continue to explore, innovate and collaborate to build an efficient, successful portfolio for the long term.”  

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