CalSTRS is expected to add a new 5% target absolute-return allocation, including TIPS and GIPS as well as infrastructure, said Sherry Reser spokeswoman.
The move would be part of a new target asset allocation for the $117.4 billion system that the investment committee of the California State Teachers Retirement System, Sacramento, will consider at its Aug. 12 meeting.
The goal of the new asset class is to add diversification and to correlate to inflation, Ms. Reser said.
Once the board adopts an asset allocation, officials expect to search first for TIPS/GIPS managers sometime in 2010, Ms. Reser said. Infrastructure searches would follow this fiscal year, including projects such as water works and excluding highways and airports, she said.
The new asset allocation would cut the global equities target to 47% from 55%, decrease fixed income to 20% from 21%; up real estate to 15% from 13%, raise private equity to 12% from 11%, and add a 1% cash allocation.
The overall asset allocation will be phased in slowly; for example, it would take at least two years to get the new absolute-return asset class to 2% of total assets, Ms. Reser said.
Separately, the investment committee at its June 4 meeting had an education seminar on adding municipal bonds to its portfolio, in anticipation of future opportunities in taxable municipal bonds, Ms. Reser said.
In other action, CalSTRS adopted a policy to exclude investment in tobacco-related stocks and bonds. For the past six years, the system has excluded tobacco-related stocks from its passive portfolios, but the new divestment policy includes actively managed portfolios as well, Ms. Reser said. The system does not have data on its current exposure to tobacco-related stocks and bonds.