The California State Teachers’ Retirement System (#CalSTRS) has realised substantial cost savings through its collaborative model, which emphasises more direct control over investments. Over a span of five years, CalSTRS saved around $1.6 billion, with the pension fund noting $781 million in savings over four years up to 2020, and $309 million in 2020 alone. These savings have been a significant achievement for the $307.9 billion pension fund.
Initiated in 2017, the collaborative model was identified as a priority after an internal evaluation showed that 97 percent of non-carried interest expenses were paid to external managers. Under the stewardship of Chief Investment Officer Christopher Ailman, CalSTRS adopted a hands-on investment approach. This approach involves engaging in direct club deals, forming partnerships with other institutional investors, and sometimes directly acquiring operating companies, serving as both a strategic and branding tool.
The success of CalSTRS’ strategy underscores the importance of strategic cost analysis in investment management. By reducing reliance on external managers and increasing in-house management of assets, CalSTRS has demonstrated that careful cost management can lead to improved savings, crucial for the fund’s longevity and the financial security of its beneficiaries.
https://www.pionline.com/pension-funds/calstrs-collaborative-model-saves-16-billion-over-5-years