US - The US$127bn California State Teachers' Retirement System has announced plans to launch a search on April 20 for up to six active equity managers to invest 10% of its international equity portfolio, or about US$3bn, in emerging markets.
The fund’s investment committee approved the proposal, which Global Pensions reported on in March, following a study by the board on emerging markets investment.
Deadline for tender is June 7 with the managers due to be selected by autumn.
The firms selected will be given full discretion to manage their allocation, including country and stock selection, within the fund’s benchmark, the MSCI Emerging Markets Free ex-Tobacco Index. Funding for the mandates will come from normal cash flow.
The CalSTRS board said it had chosen an unrestricted investment universe for emerging market investments.
The fund currently has investments in emerging markets on an opportunistic basis through its active international equity managers.
“This new program will provide us additional diversification in the international market place,” said Elleen Okada, CalSTRS director of global equities.
“The investment committee has gone through a comprehensive effort to craft an excellent emerging market program. It will ensure we achieve the best return on our members’ funds while considering the attendant risks in this investment category.”
The managers will have to consider the fund’s investment policies and standards and 20 risk factors adopted by CalSTRS in making investment decisions. Risk factors range from business practices to legal and other practices such as workers and political rights and environmental issues.
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