Market Overview

CalSTRS Reports 9.0 Percent Net Investment Return for FY 17-18

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Positive fund performance exceeds 30-year return assumption and
reinforces forward progress on funding plan.

The California State Teachers' Retirement System announced that the fund
posted a 9.0 percent return (net of fees) for the 2017-18 fiscal year,
exceeding the investment assumption of 7.0 percent for the second
consecutive year and helping advance the fund towards full funding in
the decades ahead. As of June 30, 2018, the total fund value was $223.8
billion.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20180720005523/en/

CalSTRS Chief Investment Officer Christopher J. Ailman (Photo: Business Wire)

CalSTRS Chief Investment Officer Christopher J. Ailman (Photo: Business Wire)

"This year's positive investment performance is yet another testament to
the long-term sustainability of a well-run pension fund guided by a
committed board of trustees and a staff of diverse and talented
investment experts," said Chief Executive Officer Jack Ehnes. "The
fiscal year returns are only one part of CalSTRS' pursuit of long-term
value creation. The CalSTRS Funding Plan, passed into law in July 2014,
is the overarching model of shared responsibility, working in tandem
with the positive return performance generated by the investment
portfolio."

"This year we beat the 7.0 percent goal and exceeded our benchmark,"
said Chief Investment Officer Christopher J. Ailman. "We will rank high
compared to similar funds, but it is only one year. We need to repeat
that performance year in and year out, on average, over the next 30
years. No small feat, but our award-winning staff and our complex
portfolio are designed to do just that. This is a marathon, not a sprint
to the finish line. And, as a large, mature pension system, we must
continue to explore, innovate and collaborate to build an efficient,
successful portfolio for the long term."

The fiscal year saw strong double digit returns in both the public and
private equity markets with the S&P 500 returning over 14 percent.
CalSTRS was positioned well to take advantage of this growth while
maintaining a diversified portfolio to provide risk protection through
the full allocation to the Risk Mitigating Strategies asset class which
was fully implemented during the last 12 months. Given the focus on
long-term funding to protect the funds' value, these strategies are
important to avoid losses experienced during market downturns such as
the historic 2008 global financial crisis.

                       

CalSTRS Fiscal Year 2017–18 Returns (Net of Fees)
Asset
Class and Benchmark Performance Breakdown

                                 

CalSTRS Asset
Class/Strategy

10-Yr
Return

5-Yr
Return

3-Yr
Return

Fiscal Year 2017-2018
                        Return      

Custom
Benchmark
Return

     

Over/Under
Performance

Global Public Equity       7.6%       10.8%       9.2%       11.7%       11.8%       -0.1%
Private Equity*       8.8%       12.4%       11.1%       13.8%       14.7%       -0.9%
Real Estate*       1.5%       10.8%       9.9%       10.4%       7.1%       3.3%
Inflation Sensitive       ^       5.4%       7.2%       8.5%       4.5%       4.0%
Risk Mitigating Strategies       ^       0.2%       -2.9%       1.8%       1.7%       0.1%
Innovative Strategies       ^       3.6%       5.8%       11.4%       6.5%       4.9%
Fixed Income       4.5%       3.0%       2.4%       0.3%       -0.2%       0.5%
Total Fund Performance       6.3%       9.1%       7.8%       9.0%       8.6%       0.4%

*Asset valuations and benchmark returns lag by one quarter.

^ Newly funded strategies without 10-year returns.

 

As of June 30, 2018, the CalSTRS
investment portfolio holdings
were 53.7 percent in U.S. and non-U.S.
stocks, or Global Equity; 12.8 percent in Real Estate; 12.3 percent in
Fixed Income; 8.9 percent in Risk Mitigating Strategies; 8.2 percent in
Private Equity; 1.9 percent in Inflation Sensitive; 0.8 percent in
Innovative Strategies and Strategic Overlay; and 1.4 percent in Cash.

About CalSTRS

The California
State Teachers' Retirement System
, with a portfolio valued at $223.8
billion as of June 30, 2018, is the largest educator-only pension fund
in the world. CalSTRS serves California's more than 933,000 public
school educators and their families from the state's 1,700 school
districts, county offices of education and community college districts.
A hybrid retirement system, CalSTRS administers a combined traditional
defined benefit, cash balance and voluntary defined contribution plan.
CalSTRS also provides disability and survivor benefits. CalSTRS members
retire on average after more than 25 years of service, with a median
retirement age of 62.9, and a monthly pension of approximately $4,475,
which is not eligible for Social Security participation. For more data,
download the CalSTRS Fast
Facts 2017
brochure.

See how CalSTRS demonstrates its strong commitment to long-term
corporate sustainability principles in its annual Global Reporting
Initiative sustainability report: Global
Stewardship at Work
.

Follow us on Twitter @CalSTRS.

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