The CalSTRS' investment committee on Wednesday will consider allowing up to 10% of its $27 billion U.S. fixed-income portfolio to be invested in Treasury inflation-protected securities. The proposal was recommended by the $106 billion pension fund's staff and consultant Pension Consulting Alliance. TIPS would be purchased on a tactical basis by the fund, which largely manages bonds internally. Overall, the fund's asset mix would remain unchanged.
Staff at the California State Teachers' Retirement System, Sacramento, also noted there's only a 20% chance the total fund's expected investment return will be adequate to maintain the current funded status and normal cost, which could drive up contribution rates down the road.