CalSTRS finishes with -1.3% return, beats total fund benchmark in volatile fiscal year 2021–22
News release | Karen Doron
WEST SACRAMENTO, Calif. (July 29, 2022) – The California State Teachers’ Retirement System (CalSTRS) today announced a -1.3% net return on investments for the 2021–22 fiscal year, ending with the total fund value at $301.6 billion as of June 30, 2022. The 2021–22 return, CalSTRS’ first negative return since 2009, reflects the ongoing volatility of global financial markets impacted by inflation, rising interest rates, the COVID-19 pandemic and the war in Ukraine.
“We are proud to deliver pensions to California’s public-school teachers as we have for more than a century. The value of a CalSTRS pension is that the benefit is guaranteed, even during difficult economic times. Our members can rely on us to provide a secure retirement now and in the future,” said Chief Executive Officer Cassandra Lichnock. “And thanks to our long-term approach, we remain on track to achieve full funding.”
Due in part to 2020–21’s record-breaking 27.2% return, CalSTRS remains in position to be fully funded by 2046. CalSTRS’ latest funded status is 73.0% as of June 30, 2021. The next actuarial valuation of the Defined Benefit Program, which will include an updated funded status, will be released in May 2023.
CalSTRS is a long-term investor with a goal of achieving an average return of 7.0% over the long run to meet pension obligations. The performance of the fund over the 30-year, 25-year, 20-year, 10-year, 5-year and 3-year periods are all above the 7.0% assumption.
CalSTRS beat its total fund benchmark in 2021–22 by 90 basis points—which is 0.9%. Benchmarks are set by the Teachers’ Retirement Board. Asset classes and the total fund are measured against the benchmarks. Comparing CalSTRS’ performance to its respective benchmarks identifies the contribution or loss caused by manager performance and strategic asset allocation decisions.
Financial markets experienced severe volatility in the second half of the fiscal year, as widespread economic and geopolitical issues led to global uncertainty. However, the CalSTRS Investment Portfolio is highly diversified to offset economic instability, and the portfolios within the Risk Mitigation Strategies and Inflation Sensitive asset classes helped soften public market losses.
CalSTRS fiscal year 2021–22 returns (net of fees)
| CalSTRS asset class/strategy | 10-year % return | 5-year % return | 3-year % return | Fiscal year 2021–22 portfolio % return | Fiscal year 2021–22 custom benchmark % return | Fiscal year 2021–22 over/under performance (%) |
|---|---|---|---|---|---|---|
| Public Equity (1) | 9.6 | 7.1 | 6.2 | -16.6 | -16.8 | 0.2 |
| Fixed Income | 2.2 | 1.4 | -0.4 | -10.3 | -10.4 | 0.1 |
| Real Estate (2) | 11.4 | 11.5 | 13 | 26.2 | 27.3 | -1.1 |
| Private Equity (1,2) | 15.5 | 18.8 | 23.4 | 23.7 | 23 | 0.7 |
| Risk Mitigating Strategies | 3.8 | 6.6 | 7.7 | 8.9 | 6.8 | 2.1 |
| Inflation Sensitive | 7 | 10.1 | 11.9 | 17.5 | 12.9 | 4.6 |
| Innovative Strategies (1) | 5 | 8.4 | 7.1 | 13 | 0.5 | 12.5 |
| Total fund performance | 9.4 | 8.7 | 9.3 | -1.3 | -2.2 | 0.9 |
(1) Includes Sustainable Investment & Stewardship Strategies public and private investments.
(2) Asset valuations and benchmark returns lag by one quarter.
As of June 30, 2022, the CalSTRS Investment Portfolio holdings were 38.4% in U.S. and Non-U.S. stocks (Public Equity); 16.3% in Real Estate; 10.5% in Fixed Income; 10.3% in Risk Mitigating Strategies; 15.7% in Private Equity; 5.4% in Inflation Sensitive; 1.1% in Innovative Strategies; and 2.3% in Strategic Overlay and Cash.
“As long-term investors, we think in terms of decades. One-year returns are akin to the pace of running a mile during a marathon,” said Chief Investment Officer Christopher J. Ailman. “In a very challenging and unusual market environment where both equities and bonds were down double digits, our diversified portfolio mitigated losses to produce a net -1.3% return. Despite the market turbulence, I’m proud our investment team outperformed our total fund benchmark and continued to protect and enhance the Teachers’ Retirement Fund.”
Media contact
Karen Doron
Phone: 916-414-1440
M-F, 8 a.m. - 5 p.m. PDT
Newsroom@CalSTRS.com
About CalSTRS
The California State Teachers’ Retirement System provides a secure retirement to more than 980,000 members and beneficiaries whose CalSTRS-covered service is not eligible for Social Security participation. On average, members who retired in 2020–21 had 25 years of service and a monthly benefit of $4,813. Established in 1913, CalSTRS is the largest educator-only pension fund in the world with $301.6 billion in assets under management as of June 30, 2022. CalSTRS demonstrates its strong commitment to long-term corporate sustainability principles in its annual Sustainability Report. For more information, visit CalSTRS.com.