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Pension Funds

CalSTRS discusses collaborative investing model with other asset owners

Pension fund also adopts three-pronged approach to engage with assault-weapon companies

CalSTRS' staff has been in talks with chief investment officers of other domestic and international asset owners interested in direct and collaborative investing across asset classes, CIO Christopher Ailman said at the pension fund's investment committee meeting on Wednesday.

During discussions with staff and the committee on the start of a two-year project aimed at investing collaboratively in alternative investment as well as traditional investments, Mr. Ailman said he has been discussing collaborative investing with other asset owners and managers.

He declined to name the other investors but added that staff has had discussions last year and last week, including trips made "north of here" to meet with another investor.

Staff had side meetings with chief investment officers of other U.S. and non-U.S. institutional investors at the Milken Institute Global Conference, April 29 to May 2 in Beverly Hills, Calif.

"We're the first to use the word 'collaborative' and so we are getting a lot of headlines because we are farther along," Mr. Ailman said.

Officials at the $222.5 billion California State Teachers' Retirement System, West Sacramento, expect to spend the fiscal-year studying alternative investment models, including what the collaborative model means for each asset class, the challenges of embarking on a collaborative, direct investment approach and the opportunities, he said.

Staff expects to return to the investment committee in the fall and the spring with specifics for each asset class, he said.

Separately, the investment committee adopted a new three-prong assault weapon engagement plan in which CalSTRS would first speak with and try to persuade retailers and manufacturers of assault-type weapons to discontinue selling the weapons as part of its corporate governance work plan. The plan also calls for staff to vote against the company's board if engagement does not produce results and, if those efforts fail, to divest its investment in the company.

California Treasurer John Chiang, a member of the boards of CalSTRS and the $351 billion California Public Employees' Retirement System, has been pushing both pension plans to engage with and divest from companies that sell or manufacture assault-style weapons.

In introducing a motion to adopt the plan, Mr. Chiang noted that Citigroup and Bank of America have announced policies restricting the sale of firearms by its customers and that his office is working with three other investment banks on similar policies.

Mr. Ailman said that he has spoken with other institutional investors who are looking to CalSTRS to lead on this issue.

Peers are very anxious for CalSTRS to lead and they would fall in behind CalSTRS, Mr. Ailman noted.

"Even states where tragedy has happened … are unwilling to step forward and are eager for us lead and more than happy to join us," Mr. Ailman said.

Even non-U.S. investors that are not involved in the gun issue at home have said they would be willing to join CalSTRS to show companies a block of shareholders engaged on the issue of the sale and manufacture of assault weapons.