CalSTRS decreased its target allocation to venture capital to 15% of its alternative investment portfolio, from 25%. The allowable range of venture capital investments was switched to 5% to 25% from 15% to 35%. Meanwhile, the target allocation for buyouts was raised to 70% of alternatives from 60%. Target allocations to debt-related and equity expansion remain at 5% and 10%, respectively. The board of the $126.6 billion California State Teachers' Retirement System, Sacramento, approved the changes on July 14.
The changes were made because buyout funds are rapidly outpacing venture capital, according to a staff memo to the board. No cut in the actual venture capital allocation is planned, the memo said.
Also, the board increased the amounts that staff can commit to private equity funds without getting board approval. For new manager funds, staff can commit the lesser of $250 million or 15% of the total private equity fund, under the proposal, up from $100 million or 20% of fund size. For follow-on funds, staff could commit the lesser of $500 million or 15% of fund size, up from $500 million or 20% of fund size.