CalSTRS, California's $115bn (£81bn) State Teachers Retirement System, is looking to increase its holdings in secondary private equity partnerships.
According to investment officer Trish Taniguchi, CalSTRS is looking at increasing its holdings of secondary partnerships as they offer reduced levels of risk and the ability to enhance returns.
“Rates of return are generally higher for secondary interest investments because the money is invested for a shorter period of time, she said.
Taniguchi also added that another reason to increase its secondary investment holdings was due to the potential bargains available.
According to Taniguchi, CalSTRS expects the market to provide: opportunities to purchase secondary interests at discounts to market values.
Currently, less than 5% of the $8.1bn (£5.7bn) CalSTRS' Alternative Investment portfolio consists of secondary market transactions. If however, the CalSTRS investment committee approves rule changes at its meeting on April 4, the fund's investment staff claim it would be easier for them to invest in secondary interests.
Additionally, Taniguchi said that the proposed rule changes would give the fund the to flexibility to consider new opportunities that may arise, given the changes to market conditions. CalSTRS also claim that the changes will allow staff increased flexibility to utilise independent project consultants.
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