CalSTRS may split the role of its alternative investments consultant into separate strategist and gatekeeper functions. If approved by the investment committee at its Thursday meeting, the $95.5 billion California State Teachers Retirement System, Sacramento, will issue two RFPs in December for the roles now performed by Pathway Capital Management.
A consultant to the investment committee would advise on strategy and monitor investments, while a program adviser would act as gatekeeper, thus eliminating the conflict of the consultants reviewing itself. Also, a separate adviser might be retained for international private equity investments. CalSTRS also will ask for gatekeeper applicants to price legal services on a bundled and unbundled basis. Applications would be due in February, with finalist interviews slated for March.
The need to divide the consultant role was spurred by CalSTRS growing alternatives allocation. Last month, the board adopted a plan to boost the asset class to 8% of assets from 5%. Based on projections that the fund will have $150 billion in assets in 2006, that means alternative investments will nearly triple to $12 billion over the next four years from $4.6 billion now.