US - CalSTRS staff and trustees will begin a review of active versus passive management at an investment committee meeting next week.
In June, trustees at the California State Teachers' Retirement System asked staff to review the balance of active and passive management in the scheme's global equity and fixed income portfolios as they try to find the optimal balance between the two styles.
Currently, about 70% of CalSTRS' US equity portfolio, and 50% of the non-US equity portfolio are passively managed, according to a staff memo to the investment committee. Combined, the pension fund invests US$68.7bn in these securities.
The $26.6bn fixed income portfolio is divided into core strategies, which will deliver more market-like returns, and opportunistic strategies, active strategies with a higher risk level and expected returns. CalSTRS' investment policy allows for up to 30% of the fixed income portfolio to be invested in opportunistic strategies.
The status of the existing passive versus active allocation will be discussed at the September 3 meeting, the pros and cons of the different strategies will be discussed in November, with final recommendations for shifts in the portfolio due in February.
Other pension funds have been questioning the role of active management within its portfolio in light of record investment losses last year and the beginning of this year.
In July, the Norwegian Ministry of Finance launched a search for a consultant to evaluate whether or not the Norway Government Pension Fund - Global should continue using active managment.
Ministry spokesman Anders Lande said at the time: "The purpose is to evaluate different aspects of the active management, and the consultant's report will form part of the Ministry's basis for the assessment of whether or to what extent active management of the fund ought to be continued."
According to the request, the findings will be part of a report presented to the Norweigian parliament, the Storting, in the spring of 2010.
Separately, CalSTRS staff plans to issue a request for proposal for a general consultant since the contract of incumbent Pension Consulting Alliance is due to expire. The consulting contract runs for five years. Finalists are slated to be interviewed in November.
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