CalSTRS Aims to Bring More Investment Management In-House

The CalSTRS Building

The CalSTRS Building

CalSTRS recently completed a restructuring of its investment staff, which including appointing its first chief operating investment officer.

The restructuring had a purpose: the fund is planning to move a significant portion of investment management duties in-house.

CalSTRS currently manages 45 percent of its portfolio internally. The fund wants to bring that number up to 60 percent, according to a CalSTRS press release.

More from the Wall Street Journal:

The California State Teachers’ Retirement System said it restructured how its investment office is organized and is emphasizing stronger internal controls to pave the way for a shift toward more internal management.

[…]

The closely watched $186.4 billion pension fund has previously said in investment policy documents that by managing assets internally, it can have more control over corporate governance issues and the flexibility to tailor strategies to its needs.

Calstrs will focus initially on publicly traded assets as it looks to raise the amount of assets its staff will oversee, Spokesman Ricardo Duran said.

In a signal that fixed income could be emphasized for more in-house management, Glenn Hosokawa was named director of fixed income, while Paul Shantic was named director of inflation-sensitive assets. They were previously acting co-directors of fixed income.

Fixed income made up 15.8% of Calstrs’s portfolio, as of Sept. 30, short of an allocation target of 17%. Inflation-sensitive assets made up 0.7% of pension fund assets; the target allocation for the asset class is 1%.

A new organizational structure “allows us to bring more assets in-house,” said Calstrs’ Chief Investment Officer Christopher Ailman in the release.

More details on the newly-created position of “chief operating investment officer”, from WSJ:

Debra Smith was named chief operating investment officer, a new role at the pension fund. She was previously director of investment operations.

Ms. Smith leads a new unit that will tackle issues such as compliance, ethics and internal controls. She will report to the investment committee twice a year, giving her a direct line to board members.

The position builds more separation between investment management and operations at the pension fund, allowing the chief operating investment officer more “structural autonomy,” said Mr. Duran.

CalSTRS manages $186 billion in assets.

 

Photo by Stephen Curin

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  1. […] recently announced its plans to eventually internally manage 60 percent of its assets. According to a recent survey, a majority […]

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