California State Teachers' Retirement System, West Sacramento, on Wednesday adopted fiscal year 2021 business plans for the entire $242.8 billion pension fund and each asset class.
CIO Christopher J. Ailman told the investment committee that the business plans "are actually a critical element" that keeps the team heading in the same direction.
A secret to CalSTRS' success is to think like a money manager, Mr. Ailman said.
One key goal is to reduce costs to provide CalSTRS' officials more money to invest without taking additional risk, Mr. Ailman said.
The collaborative model is expected to help CalSTRS reduce its costs with strategies such as managing more assets in-house, co-investing and, in real estate, acquiring minority or majority interests in money managers, which could not only reduce costs but provide revenue, he said.
CalSTRS' equities team is in the midst of a multiyear project to bring more money management in-house including eventually, risk factor and smart beta portfolios. In fiscal year 2021, the team expects to bring its passively managed emerging markets portfolio in-house, which should result in millions of dollars in savings.
CalSTRS officials are also moving to internal management for enhanced index investment strategies, Mr. Ailman said.
Mike DiRe, director of real estate, said his team is looking at opportunities to buy real estate investment trusts when there is dislocation in the public markets.
"We are new in making investments in the REIT area," Mr. DiRe said. CalSTRS has entered into joint ventures with REITS but found it problematic to get alignment of interests.
