The California State Teachers’ Retirement System (CalSTRS) plans to nearly double the size of its private equity portfolio over the next four years. The Sacramento-based pension fund expects to have invested up to $8.7 billion in buyout and venture capital funds by 2007, according to a new business plan adopted by the retirement system earlier this month.
Currently $4.7 billion of the plan’s $102 billion investment portfolio sits in private equity funds.
Western European and U.S.-based private equity funds are slated to receive the bulk of CalSTRS’ new commitments. The pension fund also plans to increase its stakes in secondary funds and fund-of-funds. It is also continuing to explore the possibility of investing in hedge funds.
The pension fund will seek two new investment officers to manage the growth of the portfolio.
With 4.7% of its total assets now committed to private equity funds, CalSTRS alternative investment portfolio is just short of its 6% target allocation. Like most private equity investors, it has watched the value of its portfolio fall in tandem with the public equity markets. CalSTRS’ alternative investments portfolio lost 3.9% of its value over the last three years, but since its inception in 1998, the portfolio has posted gains of 16.3%.