The California State Teachers’ Retirement System lost $7.9 billion in the last half of 2011, dragged down by non-U.S. equities, lowering its gain for the year to 2.3 percent.
While the second-largest U.S. public pension, with $144.8 billion in assets, saw growth in real estate and private equity, the slide in overseas stocks capped what Chief Executive Officer Jack Ehnes called “the most precarious markets in decades.”
The returns further strain Calstrs’ ability to meet long-term obligations to 856,000 members and their families. The fund had only 71 percent of the money it needs to pay benefits as of June 30, 2010, down from 78 percent a year earlier, according to a statement yesterday. Calstrs’ target for its annual return is 7.75 percent.
“The focus for fiscal year 2011-2012 centers on making the portfolio more nimble in a highly dynamic investment climate,” Chief Investment Officer Christopher Ailman said in the statement. “Today’s globally interconnected markets are drivers of the big highs and lows that happen in an instant.”
The fund earned 15 percent on real estate and 9.9 percent on private equity, while losing 14.1 percent in non-U.S. equities, according to the statement. Calstrs gained 12.7 percent in calendar 2010.
Its sister fund, the California Public Employees’ Retirement System, the largest U.S. public pension, posted 2011 earnings of 1.1 percent on Jan. 23.
Ehnes said Governor Jerry Brown and the Legislature should develop a plan to deal with the funding shortfall, estimated at $56 billion as of June 30, 2010.
Brown didn’t include additional state contributions for Calstrs in a series of proposals he outlined in October to resolve pension funding gaps.