PCA Keeps Position As CalSTRS Adviser –

SACRAMENTO, Calif. – The California State Teachers’ Retirement System (CalSTRS) in April reselected Pension Consulting Alliance (PCA) as its general consultant for the next five years, effective May 1.

The Encino, Calif.-based consultant had already spent five years as a general consultant for the $96 billion pension, said CalSTRS Chief Investment Officer Pat Mitchell.

BARRA Rogers Casey, Callan Associates Inc., Mercer Investment Consulting Inc. and Watson Wyatt Investment Consulting were finalists for the post.

New York-based Mercer and San Francisco-based Callan were selected as project consultants, who will be eligible to take on special assignments as needed, such as a study commissioned by CalSTRS last year to determine the effect of tobacco stocks on the S&P 500 portfolio, Mr. Mitchell said.

Special project fees will be negotiated as they come up. PCA’s fees were still under negotiation at press time, but they are expected to be in the ballpark of $250,000 to $300,000 a year, Mr. Mitchell said.

Several key factors were taken into consideration in the selection process, he said. Apart from the value of maintaining an ongoing relationship with the firm, PCA, Callan and Mercer had submitted far superior asset allocation studies than their competitors. PCA also gave the best verbal interview before the board, and finally, the fees proposed by the chosen firms were more in line with CalSTRS’ budget, Mr. Mitchell said.

All three firms will conduct an asset allocation study for CalSTRS, due in August.

While it is too early to predict what changes an asset allocation study might suggest, Mr. Mitchell did not expect any major investment shifts. Currently, CalSTRS allocates 5% of its pool to alternative investments. The pension has $ 2.3 billion committed to the asset class and another $2 billion already invested in alternatives.