California State Teachers’ Retirement System Investor Profile

The California State Teachers’ Retirement System (CalSTRS) is a pension fund that serves as the largest educator-only pension fund in the world. With approximately $314.8 billion in assets under management as of June 30, 2023, CalSTRS manages retirement, disability, and survivor benefits for over 1 million members, including active and retired California public school educators and their families. Founded in 1913 and headquartered in West Sacramento, California, United States, the organization plays a critical role in ensuring the long-term solvency of pension obligations through its investment activities.

Investment Strategy

CalSTRS maintains a diversified investment portfolio with a long-term focus on sustainable growth and risk management. The fund allocates across various asset classes, including equities, fixed income, real estate, private equity, and infrastructure. It emphasizes environmental, social, and governance (ESG) principles in its investment decisions, incorporating these factors into corporate engagement and proxy voting. CalSTRS targets inflation-beating returns to support its pension obligations and has a significant allocation to alternative investments, which stands at 28%. As one of the largest institutional investors in the United States, the organization commits to responsible investing practices, including stakeholder advocacy, to enhance overall portfolio performance while managing risks.

Private Markets Approach

CalSTRS has a 28% allocation to alternative investments, which includes private equity and real assets. The fund makes commitments to private equity funds, such as those from the Carlyle Group, and invests in real estate funds like those from Blackstone. Additionally, CalSTRS engages in direct investments in infrastructure and renewable energy projects. These strategies are part of its broader approach to alternative investments, aimed at enhancing returns through diversified exposure in private markets. The organization’s focus on these areas aligns with its long-term goals of sustainable growth and risk management.

How Fund Managers Should Approach

General Partners (GPs) seeking allocations from CalSTRS should align their proposals with the fund’s emphasis on ESG principles, sustainable growth, and risk management. Given CalSTRS’s history of active participation in global markets and its commitments to funds like those from Carlyle Group and Blackstone, GPs should highlight how their investments contribute to diversified portfolios and responsible investing practices. Proposals should demonstrate compatibility with CalSTRS’s focus on alternative investments, including private equity and infrastructure, while addressing the fund’s target for inflation-beating returns. This approach ensures that potential partnerships support CalSTRS’s overall strategy for managing pension obligations effectively.

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