CalSTRS shortlists general consultant under new approach to advisers

CalSTRS has named three consultants in its shortlist to act as general consultant, including for the first time Meketa Investment Group, long-time consultant to Harvard Management Corporation and more commonly known as a specialist in infrastructure, under a new tiered approach to the use of consultants introduced by chief investment officer, Chris Ailman.

In addition to Meketa, Mercer and incumbent provider Pension Consulting Alliance have been shortlisted for the fund’s general consultant, a review held every five years.

Ailman said the fund was looking to introduce a new structure in its use of consultants and would hire a consultant to the board, then a panel of special project consultants to work with the investment staff, and finally a new group of specialist, focused consultants.

“We will issue another RFP for a group of consultants to work for the staff, on special projects and white papers, and last year we had four in that pool,” Ailman said. “We will also issue a third RFP for specialists which will include Nobel Laureates such as Bill Sharpe and Harry Markowitz and firms that specialise in areas like Latina, or infrastructure, we are looking for those that do one thing really well.”

Ailman said Meketa scored well in its bid for general consultant because the fund was “looking for thought leaders”.

The $130 billion fund  has been a net seller of equities in the past six weeks, selling more than $3 billion, in order to return to its allocated weight.

Ailman said the fund’s outlook was “quite positive” on equities but the fund wanted to return to its neutral weights. With $72 billion in global equities at the end of September, the fund was 2 per cent overweight.

CalSTRS is also in to the second phase of its active versus passive study, and is putting together a panel of experts to debate the issues, including Diane Garnick, an investment strategist at Invesco, and Sunder Ramkumar from BGI.

This study, including a delineation of the pros and cons including fees and the fund’s experience in active versus passive, will conclude in February with a decision to either increase or decrease active allocations, if at all.