CalSTRS’ investment committee at its Nov. 4 meeting is expected to vote on a plan from the system’s innovation and risk unit to invest up to $2.5 billion in commodities over the next three years.
Christopher Ailman, chief investment officer of the California State Teachers’ Retirement System, West Sacramento, has already endorsed the investment, which was developed by CalSTRS investment officers Carrie Lo and Steven Tong; Mr. Tong also is innovation and risk director.
The innovation and risk unit considers new investment strategies for the $131.8 billion system.
If approved, the plan would not be implemented until 2011, CalSTRS spokesman Ricardo Duran said.
The plan calls for commodities investments to total less than $150 million in the first year of implementation, but that total could grow to $2.5 billion by the end of the third year. Investments would include commodity index futures and swaps, hedge funds and trend-following funds and physical commodity-producing partnerships, the plan states.
The plan would make CalSTRS one of the largest institutional investors in commodities.
The report says the investments in commodities will provide a hedge against increased inflation, noting that CalSTRS’ portfolio currently does not include assets that perform that function.