US - The US$126bn California State Teachers' Retirement System (CalSTRS) is considering hiring up to six active emerging markets equity managers to handle about US$3bn in emerging market assets.
The move is part of a proposal being put to the fund’s investment committee on April 7.
The mandates, part of the fund’s emerging markets programme, would be funded with a goal of achieving an asset allocation weight of about 10% of the fund’s non-US portfolio, or US$3bn.
CalSTRS said the weighting is generally equivalent to the emerging markets weight in the Morgan Stanley Capital International (MSCI) All Country World Index ex-US (ACWI). The portfolios would comprise publicly traded equity securities and cash and would be managed using active management strategies.
The fund said the briefs would be evaluated against the MSCI Emerging Markets Free ex-Tobacco Index.
The tender and formal review of emerging markets investment is part of the investment committee’s major work plan objectives carried forward from last fiscal year.
In February this year, the investment committee voted to put forward the tender proposal for emerging market equity managers, to operate within an unconstrained emerging markets investment universe.
According to CalSTRS current policy guidelines, the non-US active portfolio is managed by external managers for EAFE, Pacific Basin and Europe. Approval of the proposal would require revision of CalSTRS’ policy to include emerging markets.
In addition to appointing managers, CalSTRS said it might use the search process to establish a “pool” of qualified investment management firms, which would be used to replace firms that might be terminated in the future, or to add a firm as necessary.
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