CalSTRS' staff is recommending shifting the target asset allocation for the system's $31.6 billion fixed-income portfolio to 70% internally managed core and 30% externally managed opportunistic over the next three years, from 95% and 5% respectively, according to a staff memo to the system's board. Staff of the $129 billion California State Teachers' Retirement System, Sacramento, also endorsed expanding the portfolio's investible universe to include assets within the Lehman Brothers Universal index. It was not known if the changes would lead to searches for new managers; Sherry Reser, CalSTRS spokeswoman, could not be reached by press time for details.
Separately, CalSTRS' alternative investments program returned 26.3% for the year ended March 31, vs. its custom benchmark's 6.2% return, according to the staff memo. The real estate portfolio returned 18.3%, gross of fees, for the year ended March 31, compared with 15.5% for the NCREIF Property index.
The CalSTRS board will consider the staff recommendations at its Sept. 7 meeting.