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CalSTRS to hike private equity, real estate
Pensions and Investments
January 31, 2008
CalSTRS will increase its targets to real estate and private equity by one percentage point each, cutting U.S. equity and fixed income, pending approval at the $173.7 billion system’s Feb. 7 board meeting.
If approved, real estate will increase to 10% and private equity, 8%. Domestic equity would be cut one percentage point to 41%, with fixed income trimmed to 20% from 21%. International equity will remain unchanged at 21%.
The changes are part of the plan’s implementation over the past two years of long-term targets of 40% domestic equity, 20% each fixed income and international equity, 11%, real estate and 9% private equity. No new managers will be hired, said spokeswoman Sherry Reser.
The real estate and private equity portfolios already exceeded the previous targets, according to the memo. In the seven months since the last allocation change, “we have continued to see capital calls on our prior-year commitments to real estate and private equity. At the same time, the U.S. and global equity markets have moved sideways,” the memo said.
The California State Teachers’ Retirement System, Sacramento, will also extend the contracts of its two alternative investment consultants, Altius Associates and Cambridge Associates, for three months to May 31, pending board approval. Staff needs the extra time to review RFPs issued in October, according to an agenda item for the board meeting. CalSTRS is looking for consultants to assist with private equity deals in the Americas; Europe; Middle East and Africa; and Asia Pacific. The pension fund has a $15 billion private equity portfolio. Cambridge Associates advises on deals in the Americas and Altius is the European adviser.
Separately, CalSTRS formed a $200 million joint venture with real estate investment firm Sealy & Co. Inc. to invest in industrial real estate, confirmed Ms. Reser. CalSTRS is making 90% of the commitment; Sealy is committing the remainder, she said. Adviser Principal Real Estate Investors will assist.
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