CalSTRS will consider hedge funds investments as well as mezzanine and project finance investments as part of an asset allocation study to be conducted during the next 12 months, according to the fund's business plan.
During the coming year, the investment staff of the $126.6 billion California State Teachers' Retirement System, Sacramento, will also propose creating an internally managed alpha incubation program, leveraging existing staff capabilities. As discussed last year, staff also plans to consider generating alpha from the following externally managed equity strategies: concentrated, market neutral, micro cap, rotational and active tilts. Dollar or percentage amounts were not cited for any of the strategies.
Officials for CalSTRS' alternatives program will also consider increasing its co-investment program, seeding new general partners' teams for specific markets, direct investing in public or private investment vehicles, and investing in natural resources and other private markets.
The business plan will be discussed at the board's July 14 meeting.
Separately, CalSTRS staff recommended extending McKinsey and Co.'s alternative investments consulting contract by two years, until June 30, 2007. McKinsey monitors performance and general private equity trends for the fund.