CalSTRS reports 9% net investment return for FY 2017–2018

The California State Teachers’ Retirement System has posted a 9 percent return (net of fees) for the 2017–18 fiscal year, exceeding the investment assumption of 7 percent for the second consecutive year and helping advance the fund toward full funding in the decades ahead. As of June 30, 2018, the total fund value was $223.8 billion.

“The fiscal year returns are only one part of CalSTRS’ pursuit of long-term value creation,” said CEO Jack Ehnes. “The CalSTRS Funding Plan, passed into law in July 2014, is the overarching model of shared responsibility, working in tandem with the positive return performance generated by the investment portfolio.”

“This year we beat the 7 percent goal and exceeded our benchmark,” said CIO Christopher Ailman. “We need to repeat that performance year in and year out, on average, over the next 30 years.”

The fiscal year saw strong double-digit returns in both the public and private equity markets with the S&P 500 returning more than 14 percent. CalSTRS was positioned to take advantage of this growth while maintaining a diversified portfolio to provide risk protection through the full allocation to the Risk Mitigating Strategies asset class, which was fully implemented during the last 12 months. Given the focus on long-term funding to protect the fund’s value, these strategies are important to avoid losses experienced during market downturns such as the historic 2008 global financial crisis.

As of June 30, 2018, the CalSTRS investment portfolio holdings were 53.7 percent in U.S. and non-U.S. stocks, or global equity; 12.8 percent in real estate; 12.3 percent in fixed income; 8.9 percent in risk mitigating strategies; 8.2 percent in private equity; 1.9 percent in inflation sensitive; 0.8 percent in innovative strategies and strategic overlay; and 1.4 percent in cash.