CalSTRS posted a net return of 7.7% for the year ended Dec. 31, above its benchmark return of 7%, according to an investment report included with materials for its upcoming March 12 investment committee meeting.
For the three, five and 10 years ended Dec. 31, the $349.7 billion California State Teachers’ Retirement System, West Sacramento, returned an annualized net 3.1%, 7.7% and 7.8%, respectively, above their respective benchmarks of 2.7%, 7% and 7.4%.
CalSTRS also disclosed an annualized net return of 8.1% for the 30 years ended Dec. 31. The pension fund has a 30-year goal of an average annual return of 7%. CalSTRS’ fiscal year ends June 30.
The pension fund had returned a net 9.2% for the year ended Dec. 31, 2023.
For the most recent year ended Dec. 31, the Russell 3000 index returned 23.8%. Reflecting the outstanding public equity environment for the latest calendar year, CalSTRS’ top asset class was public equities, which returned a net 16.9%, above the benchmark return of 16.7%.
In the investment report, CalSTRS cited the continued dominance of technology stocks as well as increased investor optimism triggered by the beginning of Federal Reserve rate cuts in September.
The pension fund’s collaborative strategies asset class, which invests in both public and private innovative strategies, was the next-best performer for 2024, with a net return of 11.1%, above its benchmark return of 7.5%. The report cited the asset class’s direct lending exposure as the primary driver of outperformance.
Next was private equity, which returned a net 8.9% — above its benchmark return of 7% — followed by the inflation-sensitive asset class, which returned a net 8.4% (benchmark 4.4%), primarily driven by strong outperformance by infrastructure and commodities; risk-mitigating strategies, 2% (0.9%); fixed income, 1.8% (1.6%); and real estate, -9.7% (-8%).
As of Dec. 31, CalSTRS’ actual allocation was 40.5% public equities, 15.4% private equity, 13.2% real estate, 12% fixed income, 8% risk-mitigating strategies, 6.6% inflation sensitive, 2.5% cash/liquidity and 1.8% collaborative strategies.
The target allocation is 40% public equities, 15% real estate, 14% private equity, 13% fixed income, 10% risk-mitigating strategies, 6% inflation sensitive and 2% cash/liquidity.
