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
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