The $191.4 billion California State Teachers‘ Retirement System, West Sacramento, had a 4.8% rate of return for the fiscal year ended June 30 — higher than the 4.6% custom policy benchmark but 270 basis points below 7.5% its assumed rate of return, according to preliminary investment results released Friday.
“The six-year bull market is admittedly long in the tooth and since the majority of our assets are in stocks, our portfolio will reflect that larger reality,” said Christopher Ailman, chief investment officer, in a statement.
Mr. Ailman, said CalSTRS is a long-term investor with a 30-year investment horizon and that any single year of over-performance or underperformance will “not make or break us.”
It is the first time since the 2011-‘12 fiscal year that CalSTRS underperformed its assumed rate of return. Despite its underperformance, the CalSTRS return surpassed the Sacramento-based $301 billion California Public Employees’ Retirement System return of 2.4% for the fiscal year.
Global equity, the fund’s largest asset class, returned 3.1% for the fiscal year, 0.1% above its custom benchmark. The fixed-income return was 2.1%, slightly above its 1.8% custom benchmark.
Real estate was CalSTRS’ best-performing asset class, at 13.4%, 1 percentage point higher than the custom benchmark of 12.4%. Private equity showed a 9.1% return; the custom benchmark was 7.6%. Both asset class returns are as of March 31, lagging the rest of the portfolio by one quarter.
Mr. Ailman was traveling and unavailable for additional comment, said CalSTRS spokesman Ricardo Duran.