CalSTRS Increases PE Allocation Target

CalSTRS has increased their target PE allocation in an effort to increase investment into the low carbon transition.

Institution: California State Teachers’ Retirement System
Headquarters: Sacramento, US
AUM: $307.2 billion
Target allocation to private equity: 14%

The California State Teachers’ Retirement System has increased its target private equity allocation from 13 percent to 14 percent. Board documents revealed that the increase is largely due to an improvement in the long-term risk adjusted returns that private equity brings to a portfolio. The increase in allocation will specifically target investments into the low carbon transition, with CalSTRS pledging net-zero portfolio emissions by 2050.

CalSTRS previously outlined in their 2021 and 2022 private markets low-carbon solutions landscape the profile of vehicles they were looking to target:

  • Opportunistic Climate Infrastructure Investments with a target of 10-15 percent net IRR.
  • Hybrid/Innovative Climate Investments with a target of 15-25 percent net IRR.
  • Venture Capital/Growth Equity Investments with a target of over 25 percent IRR.

Last year CalSTRS invested over $1.3 billion into these vehicle profiles.

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