This decade may be the worst decade for investments and financial instruments in the US since the civil war, and CalSTRS continues to engage with its business partners to try and improve the situation. Within private equity Ailman says there is a close watch on the funds that it allocated money to in 2007/08, partly because they were such large funds. “The real challenge will be to see how those funds we allocated money to in 07/08 funds, which raised very large funds, perform. Part of the question is, is that the right structure, are those funds too big for this investment environment?

And we are having that kind of long term dialogue with our business partners.” While CalSTRS will reduce its private equity commitments, it will continue to invest in middle market buyouts, somewhat to venture capital and some of the opportunistic opportunities. It is also in open dialogue with Barra to refine the inclusion of private investments in its risk management processes. Last year an innovation and risk group was created and it has been implementing Barra 1 across the portfolios. “The challenge in a global diversified portfolio is trying to model the private asset classes.

Join the discussion