CalSTRS adds ‘consortium’ as investment option

By revising its infrastructure policy, the California State Teachers’ Retirement System moves one step closer to building a co-investment platform.

The California State Teachers’ Retirement System (CalSTRS) is steadily working towards establishing a consortium-type platform that will focus on investing in North American infrastructure, most recently by adding the definition of 'consortium' to its infrastructure policy.

The revision of the infrastructure policy, which also included changing the performance benchmark from CPI plus 5 to CPI plus 4, was passed on first reading by the Investment Committee.

“We have no specific investments to report along these lines, but the decision allows us to begin working on the formation of a consortium-style relationship with another institutional investor,” CalSTRS’ spokesperson Ricardo Duran told Infrastructure Investor in an e-mailed response.

CalSTRS’ chief investment officer Christopher Ailman first announced the pension fund’s intention to form a large group of investors to invest in and focus on North America, last October. “We’ll build a large fund ourselves, similar to the IFM model,” Ailman had said at the time, referring to the Australian fund manager, which is owned by 30 Australian superannuation funds.

CalSTRS has been investing in infrastructure since 2010. As of December 30, 2014, the pension fund’s inflation-sensitive portfolio, which comprises infrastructure and global inflation securities, stood at $1.4 billion, accounting for 0.7 percent of the fund’s $188.8 billion portfolio. The target allocation for the asset class is one percent.

Founded in 1913 and headquartered in Sacramento, CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. It provides benefits to over 862,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts. The second-largest public pension fund in the US, CalSTRS is the largest educator-only pension fund in the world.