CalSTRS' investment committee, amid mixed investment results, is scheduled to vote Friday on revisions to an in-state investment program that would take into account fiduciary duty in connection with the goal of investing 2% of the portfolio in California “emerging markets,” which CalSTRS defines as the state's underserved markets.
“To clearly state that it is the board's desire, all things being equal, to give preference to California investments, but also recognize that fiduciary duty and risk and return always come first,” according to an agenda item.
The agenda item said returns from California investments “have been very mixed at best,” but the item does not offer specifics. It is also not clear whether returns from investments in underserved markets in California, have been worse than the entire in-state portfolio. Underserved markets, according to CalSTRS' policy would include urban or rural communities undergoing or in need of revitalization that are conducive to business development.
Statistics from the $183.8 billion California State Teachers' Retirement System, West Sacramento, show that the California investment portion of the pension fund's portfolio as of June 30, 2013, amounted to $23.9 billion, 14.5% of the total retirement system portfolio at the time. Exposure to California underserved markets represented 2.7% of the total portfolio.
Exposure to California companies through investments in public equity index funds, totaling $10.4 billion, makes up the largest investment allocation in the in-state investment program. Other investments are in corporate debt and short-term bonds, real estate and private equity.
CalSTRS spokesman Ricardo Duran could not immediately produce performance returns for the in-state investment program or the underserved markets segment.
Under the new policy, the 2% goal would also be reviewed periodically.