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CalSTRS considers increasing allocation to infrastructure

by Zoë Wolff

The $191.4 billion California State Teachers’ Retirement System is considering increasing its infrastructure allocation in November.

During the pension fund’s Sept. 2 meeting, the investment committee discussed the findings of its 2015 asset allocation study. If approved at the November board meeting, CalSTRS’ target allocation to infrastructure will increase from 1 percent to 2 percent.

According to meeting documents, infrastructure is becoming more attractive to the pension fund as it reaches the maximum allocation constraints on private equity and real estate. The documents also indicate CalSTRS expects infrastructure to produce long-term results with desirable risk levels and attractive diversification benefits relative to other asset classes.

The pension fund currently has just under $1 billion invested in infrastructure, less than its current target allocation. If the increase is approved, CalSTRS would be able to invest more than $3 billion in infrastructure.

Earlier this year, CalSTRS teamed up with APG and Argo Infrastructure Partners to form the Infrastructure Alliance Partners to invest in U.S. energy infrastructure. Last month, the partnership acquired the Cross-Sound Cable, a high-voltage direct current transmission system that runs between New England and Long Island.

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