CalSTRS chalked up a 13.1% return in 2004. U.S. equities returned 12.4%, beating the benchmark Russell 3000 (ex-tobacco) index 's 11.9% return; alternatives jumped 22%, beating the custom benchmark's 9.8% return; real estate returned 15.4%, beating the custom benchmark's 12.4% return; fixed income edged out its benchmark by 0.1 percentage points, with a 4.9% return; and international equities underperformed the MSCI All Country Free (ex-U.S.) benchmark by 0.8 points, returning 20.4%.
Separately, the $126.9 billion pension fund will seek up to six active emerging markets equity managers to run up to $3 billion in assets, said Sherry Reser, spokeswoman. Details on the source of funding for the new mandates have not been decided, and it will be at least six months before managers are hired. The fund may also create a pool of reserve managers it would use to replace or add to the selected firms without going through the RFP process. The California State Teachers' Retirement System, Sacramento, approved a plan to weight the emerging markets exposure at 10% of international equities, currently valued at $31 billion. As of Jan. 31, State Street Global Advisors managed $2.5 billion for the system in an emerging market index fund.
Separately, the board approved a broad plan to expand the pension fund's currency overlay program, which could eventually lead to hiring one or more external currency overlay managers. CalSTRS officials are considering expanding the program to cover foreign private equity and real estate, increasing the types of hedging tools used, and seeking to create alpha-generating currency programs. Further details will be provided at CalSTRS' July meeting.