US - CalSTRS, the giant $95.5bn California State Teachers Retirement System, is to cut its overall allocation to an approximately $19.6bn international equity brief from 25% to 20% amid performance concerns.
A spokeswoman for the fund explained that the reason for the 5% decrease was due to the poor performance of non-US equities over the last three and a half years.
“With 25% in international equities, we had a higher investment in this asset class than our peers,” she said.
“We had a big bet on international equities about three and a half years ago and our latest ALS [asset liability study] revealed that these equities were not performing so well.”
She added that the reduction in exposure to the portfolio would take place across a two year period, over which time mandates will be decreased. The fund does not intend to part company with any of the existing manager line-up for the asset class.
CalSTRS aims to bring in a graduated decrease in its international equity investments to 21% by mid-2002, followed by 20% by July 2003.
The existing international equity managers are Bank of Ireland Asset Management ($754m); Battery March Financial Management ($364m); Blackrock, Inc. ($229m; Brinson Partners Non-USEQ ($400m); Capital Guardian Trust ($1bn); Delaware International Advisors Inc. ($415m)Fidelity Management Co. ($418m); Fiduciary Trust ($483m)Goldman Sachs Asset Management ($322m); Lazard Freres ($679m) Marvin & Palmer Associates ($376m); Morgan Stanley ($688m); Newport Pacific Management ($197m); Nicholas-Applegate Capital Management ($952m); Oechsle International ($920m); Schroder Capital ($472m); Scudder Kemper Investments ($609m); Barclays Global Investors (EAFE Index, $5.8bn), and State Street Global Alliance (EAFE Index, $3.8bn and Emerging Market Index $1.1bn).
STRS International ($53m) is employed on a transitional basis.
CalSTRS is advised by Pension Consulting Alliance.
By Janet Du Chenne
This week's edition of Professional Pensions is out now.
Laytons partner Jennie Kreser speaks of her concerns over pension outcomes.
Guy Opperman has indicated his support for a fresh pensions commission as the government seeks to understand how to progress pensions policy in a wide range of areas.
Auto-enrolment (AE) minimum contribution rates could rise to 12% by 2030, with a 50/50 split between employer and employee, the Pensions and Lifetime Savings Association (PLSA) says.