Searches and Hires

CalSTRS picks 8 managers for future ESG-related opportunities

Pension fund will also explore direct investment opportunities in private equity, real estate and infrastructure.

California State Teachers' Retirement System, West Sacramento, hired eight environmental, social and governance-focused managers that will be eligible to receive investments when opportunities arise, said Michelle Mussuto, spokeswoman for the $225.3 billion pension fund, in an email.

CalSTRS launched an alternative solicitation proposal in October, she said. It was conducted in-house.

The managers are Impax Asset Management, Generation Investment Management U.S., Brown Advisory, Schroder Investment Management North America, Nordea Investment Management North America, Hermes Investment Management, Candriam Luxembourg and Rockefeller & Co.

These managers are now eligible to receive up to a combined $1 billion in commitments.

Impax was chosen for its Impax Leaders strategy investing in companies in the environmental and resource efficiency market, as well as the Impax Water strategy. Generation was chosen for an Asia fund; Brown for a large-cap sustainable growth strategy; Schroders for an international equity strategy; Nordea for an emerging markets equity ESG strategy; Hermes for a global emerging markets ESG equity strategy; Candriam for a sustainable world equity strategy; and Rockefeller, a global sustainability and impact equity strategy.

Separately, CalSTRS' staff plans to present options in May or June that the pension plan pursue a larger commitment to direct investing in real estate, private equity and infrastructure, according to agenda materials for its investment committee's Feb. 7 meeting. Right now, CalSTRS owns general partner stakes in real estate firms only. CalSTRS does co-investing in all three asset classes and has custom accounts with managers in real estate and infrastructure. The pension fund had 11.8% invested in real estate, 7.6% in private equity and 1.6% in inflation-sensitive assets, which includes infrastructure.

Also, CalSTRS earned a 16.8% net return for the calendar year, 10.4% for the five years, 5.5% for the 10 years and 8.7% for the 30 years ended Dec. 31. CalSTRS' goal is to earn a 7% net return over the next 30 years, according to the chief investment officer report for the Feb. 7 investment committee meeting. The best-performing asset class for the year ended Dec. 31 was global equities, with a 24.1% return, just above its 24% benchmark. The worst-performing asset class in 2017 was fixed income at 4.3%, which still topped its 3.7% benchmark.