Tag: Paul Shantic

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

CalSTRS Appoints Three Key Investment Staff As Fund Completes Restructuring

California sign

CalSTRS has finished a restructuring of its investment staff, and announced Friday it had made three key appointments: the fund hired its first Chief Operating Investment Officer, as well as new directors of Fixed Income and Inflation Sensitive investments.

From a CalSTRS release:

Debra Smith has been selected CalSTRS Chief Operating Investment Officer (COIO). Glenn Hosokawa was named director of the $22.4 billion asset class, Fixed Income, the funds’ second largest. Paul Shantic was named Director of Inflation Sensitive, the newest and smallest asset class with an investment portfolio at $1.4 billion.

“These three appointments, coupled with our 2010 creation of a Deputy Chief Investment Officer, completes a new organizational structure that allows us to bring more assets in-house,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “This structure matches what you find in most large investment money managers. This also fits our plans to internally manage more of our assets–currently at 45 percent in-house–to a projected 60 percent internally managed.”

[…]

All three moved up from high-level positions in CalSTRS. Ms. Smith was director of investment operations. Messrs. Hosokawa and Shantic were acting co-directors of Fixed Income. All three come with deep knowledge and experience in finance and investment management and operations.

CalSTRS’ inaugural COIO, Ms. Smith, has risen through the ranks at CalSTRS from associate investment officer in 1998 to director of investment operations in 2010. She holds a Bachelor of Science degree from Fresno State University in business administration, finance and marketing. In 2012 she received a certificate as a graduate of the CalSTRS Management Academy. Ms. Smith is currently enrolled in the CalSTRS Executive Development Program with a graduation date of November 2014.

“I look forward to collaborating with investment management at CalSTRS and with our strategic business partners to put in place adaptive and innovative solutions to achieve our mission, which is securing the financial future and sustaining the trust of California’s educators,” Ms. Smith said.

More on the fund’s new investment staff structure:

The new structure has the COIO overseeing Investment Operations, Branch Administration, and a new unit comprised of Compliance, Internal Controls, Ethics and Business Continuity. The new position will also directly report to the Investment Committee twice per year. This fulfills a goal of CalSTRS’ internal auditors, who recommended the separation between investment management and investment operations.

“This new structure puts in place a smoother operation for a portfolio of our size and allows for better oversight by the board, the Deputy CIO and myself,” said Mr. Ailman, adding that: “The competition for these positions was very intense and was nationwide in scope, which speaks well for the quality of the talent we have in house.”

Read the entire release, including bios of the three appointees, here.