CalSTRS Modifies Target Allocation –

The California State Teachers’ Retirement System (CalSTRS) will slow the pace of its ambitious private equity program that was just approved by the fund’s investment committee in July.

CalSTRS now plans to nearly double the size of its $4.7 billion private equity program over the next five years, committing up to $8.7 billion to buyout and venture capital funds by 2008.

Originally, the plan had set a four-year goal for reaching the target allocation.

The Sacramento-based pension fund’s investment committee approved the change in September.

After two consecutive years of write-downs, CalSTRS has come under fire from pensioners watching the value of their retirement incomes shrink, and they have also been catching heat from the pension fund’s trustees. The pension fund is becoming more and more cautious in selecting fund managers. Last month it made its two new fund commitments, the first investments it’s made since November 2002.

The bulk of CalSTRS’ new allocation will go to Western European and U.S.-based private equity funds, as well as secondary funds and funds-of-funds.

CalSTRS manages a $100 billion investment portfolio. CalSTRS’ private equity portfolio accounts for $4.7 billion of the fund’s $92 billion total market value. The fund invests in direct equity, private equity and venture capital partnerships.