California CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
CalSTRS Outperforms Real Estate Benchmark Despite ‘Roller Coaster’ Market
The California State Teachers’ Retirement System (CalSTRS) reported a 6.8% net return on investments for the fiscal year ending June 30, 2019, and recorded its highest-ever fund value at $236.9 billion. The pension fund also reported real estate generated an 8.2% 12-month return, outperforming its benchmark by 170bps, as of March 31, 2019.
CalSTRS’ CEO Jack Ehnes says, “The $5.1 billion in additional pension payments in the 2019-20 state budget demonstrate the commitment and high priority California places on its teachers’ retirement security.”
Its long-term investment strategy seeks an average of 7% return over a multiyear horizon to meet pension obligations for current and future retirees. The 3-year, 10-year and 25-year fund performance are all above the 7% investment return assumption, at 9.7%, 10.1% and 8%, respectively, noted CalSTRS.
CalSTRS’ CIO Christopher J. Ailman adds, “It was a roller coaster year and a very challenging environment in which to generate returns. Thanks to the in-house expertise of our investment team, we were able to come very close to our assumed rate of return despite the instability of the market.”
CalSTRS Fiscal Year 2018–19 Returns (Net of Fees)
Asset Class and Benchmark Performance Breakdown
|
CalSTRS Asset Class/Strategy |
10-Yr Return |
5-Yr Return |
3-Yr Return |
FY 2018-19 Return |
FY 2018-19 Custom Benchmark Return |
FY 2018-19 Over/Under Performance |
| Total Public Equity |
11.8 |
7.2 |
12.0 |
5.3 |
5.2 |
0.1 |
| Private Equity* |
13.5 |
10.6 |
13.8 |
10.5 |
9.6 |
0.9 |
| Real Estate* |
8.2 |
9.9 |
8.9 |
8.2 |
6.5 |
1.7 |
| Inflation Sensitive |
^ |
4.5 |
7.9 |
6.0 |
2.4 |
3.6 |
| Risk Mitigating Strategies |
^ |
1.4 |
0.1 |
8.3 |
7.2 |
1.1 |
| Innovative Strategies |
2.7 |
5.5 |
8.8 |
9.2 |
5.1 |
4.1 |
| Fixed Income |
4.8 |
3.4 |
3.1 |
8.1 |
7.9 |
0.2 |
| Total Fund Performance |
10.1 |
6.9 |
9.7 |
6.8 |
6.5 |
0.3 |
* Asset valuations and benchmark returns lag by one quarter.
^ Newly funded strategies lack 10-year return sample size.
*Pictured CalSTRS Sacramento headquarters
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Sale/Acquisition
