Calstrs, the third-largest pension scheme in the US, is to further pull money from its external fund managers as part of an on-going strategy to reduce money held externally.
The Calstrs Investment Business Plan, published in July this year, shows the body’s intention to bring in-house assets to 50 percent over the next three years. As of June this year, Calstrs had 46 percent in-house, 54 percent external and oversight of $193 bn of assets.
Over the last year, it has brought $13 bn in-house. Over the longer term, Calstrs confirms to IR Magazine that it wants to manage 60 percent of assets in-house.
The business plan states a three-part investment process: ‘The first is to continue to integrate ESG and sustainability into the investment process, [then] expand the diversity of investment management, all the while seeking to keep costs down with expanded internal management.’
According to its latest annual report, the pension scheme’s largest external mandates are with Generation Investment Management – the London-based company that was co-founded by former US vice president Al Gore – New York-based Lazard Asset Management and CBRE Global Investors, the property investment specialist.
The number of investment staff employed by the pension fund has risen 15 percent to 155 over the past two years to deal with the increase in capital managed internally.
Calstrs’ latest annual report shows it paid $155.7 mn in investment fees in the year to the end of June 2015, nearly 10 percent less than it paid in fees the previous year. The fee intake of investment managers Morgan Stanley, T Rowe Price and Aberdeen Asset Management all fell significantly in that period, by 61 percent, 24 percent and 15 percent, respectively.
