CalSTRS today issued a RFP for three or four firms to be on a pre-approved list of core-plus and high-yield bond managers. As previously reported, the $137 billion California State Teachers' Retirement System, Sacramento, is making its first investment in core-plus fixed income, with allocations expected to total $4.5 billion to $6 billion. The source of funding has not been set, said Michelle Cunningham, director of fixed income.
CalSTRS currently employs three high-yield bond managers, which collectively ran $1.9 billion as of Oct. 31. Those managers are: Seix Investment Advisors, $719 million; MW Post Advisory Group, $687 million; and Shenkman Capital Management, $489 million.
Capital Guardian and Hartford Investment Management ran $393 million and $470 million, respectively, in high-yield bond portfolios for CalSTRS as of June 30, but those portfolios had shrunk to $1,264 and $12,031, respectively, as of Oct. 31, according to CalSTRS records. CalSTRS and HIMCO officials could not provide clarification by press time. Chuck Freadhoff, a CapGuardian spokesman, said the firm does not comment on the firm's clients or their policies.
CalSTRS officials do not plan to change the fund's total allocation to high-yield bonds, now set at between $1.5 billion and $2.5 billion.
The RFP can be found at www.calstrs.com/About%20CalSTRS/Contract%20Opportunities/RFP/2P200509.aspx. Proposals are due April 12, with selections expected in early summer.
Pension Consulting Alliance assisted.