CalSTRS will likely hire six infrastructure managers to begin investing the pension funds initial $800 million allocation to the asset class, according to an agenda item for the systems Sept. 4 investment committee meeting.
Three managers would manage assets, and another three will be retained for future allocations if the portfolio continues to grow. No date for issuing an RFP has been set.
The $160.3 billion California State Teachers Retirement System, Sacramento, in July approved an allocation of 0.5% of total assets to infrastructure.
Staff will work with general consultant Pension Consulting Alliance to develop an alternative fee structure for these managers, according to the agenda item.
Since we are seeking return and a risk level just above fixed income, but below the overall risk and return of real estate, the traditional 2 & 20, or a 2% management fee with a 20% share of the excess return structure, will be too expensive and eat up the desired return, according to a staff memo to the board.