Loyal Legionnaire

The Centurion

CalSTRS is the largest educator-only pension fund in the world with assets totaling $336B+…

One of the main factors driving asset growth at CalSTRS is its CIO, Christopher Ailman.

• One of the longest tenured Chief Investment Officers (2000-2024)

• Grew pension from $109B to $336B

• Implemented the Collaborative Model which brought more assets in-house ($1.6B in savings over 5 years)

• Innovated with new strategies, including investing in emerging private markets managers

• Outperformed 7% return benchmark over a 20 year timeline (8%)

On January 11th, Ailman announced his retirement, effective on June 30, 2024.

As CalSTRS looks to fill the power vacuum, let’s dive into the history of pension funds + investing insights from their portfolio.

Origins

In 13 B.C., Emperor Augustus Caesar was concerned about retired soldiers turning on him and taking Rome by force.

His next move left a legacy that outlived Rome.

• After 20 years in a legion and 5 years in military reserves, a soldier would earn a lump sum equivalent to 13X the a soldier’s average salary

• This is the first recorded instance of a “pension plan” in human history

• Known as the praemia

In the U.S., the modern, non-military pension system was introduced in 1920

Congress passed the Federal Employees Retirement Act, granting pensions to federal employees.

The California State Teachers’ Retirement System was actually established before this, in 1913.

Fund Favoritism

The CalSTRS portfolio is heavily weighted with equities and real estate:

• Public Equities (41.6%)

• Private Equity (15.4%)

• Real Estate (14.2%)

One of the biggest wins in tweaking their investment approach has been the Collaborative Model.

Instead of relying completely on passive investments in managers (HF/PE), Ailman and his team worked on being directly involved in investments.

CalSTRS currently actively manages:

• 85% of Fixed Income Strategies

• 75% of Global Equities Strategies

• ~25% of Private Markets Strategies

They recently shifted their target for co-investments and direct exposure in private markets from 20-25% to 30%.

By moving a significant chunk of their investing activity in-house, they cut costs (fees) and developed their internal investing capacity.

Some quick hitters on CalSTRS’s PE portfolio:

Blackstone is their favorite fund, and they committed $6.7B of capital between 2000 and the present. They invested $1.6B in Blackstone Capital Partners V in 2006, the largest check CalSTRS wrote to a PE / VC fund.

CVC is their best performer of funds with $2B+ in committed capital from CalSTRS. The fund managed to generate 15.8% IRR, anchored by a 40.6% IRR in CVC European Equity Partners III (2001).

TPG, from an IRR standpoint, had the worst performance of the group. However, the firm received a $1B commitment from CalSTRS in 2006 for TPG Partners V. That commitment was the second largest private equity check CalSTRS wrote, behind the Blackstone check mentioned above.

English Football League Offering

We are excited to send across a special opportunity to invest in a historical EFL Championship League Soccer Team with Premier League upside.

Given the high profile nature of this deal, we will provide info to serious investors that want to invest.

Reservations will be added to a waitlist on a first come, first serve basis.

Minimum is $25,000

NOTICE: NOT AN OFFER TO SELL OR A SOLICITATION TO BUY. AVAILABLE TO VERIFIED ACCREDITED INVESTORS ONLY PER RULE 506(c) OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND/OR OTHER APPLICABLE U.S. FEDERAL AND STATE EXEMPTIONS FROM REGISTRATION. The material and content presented herein is qualified in its entirety by an offering memorandum (the “Memorandum") which contains more complete information including risk factors. The material and content herein contains forward-looking statements and hypothetical economic forecasts that may not be realized. By receiving or viewing this material, you acknowledge and agree not to rely upon it in making an investment decision. Please read the Memorandum. This material and content do not constitute or form a part of any offer to sell or solicitation to buy securities nor shall it or any part of it form the basis of any contract or commitment whatsoever. Without limiting the foregoing, this material and content do not constitute an offer or solicitation in any jurisdiction in which such an offer or solicitation is not permitted under applicable law or to any person or entity who is not an “accredited investor” as defined under Rule 501(a) of the U.S. Securities Act of 1933, as amended, and/or who does not possess the necessary qualifications described in the Memorandum and/or applicable exemptions under the U.S. Securities Act of 1933, as amended.  Please read the Memorandum.

Headlines

• Permira is taking Squarespace private in the year’s second largest LBO. Techcrunch article here

• Accel raises $650M to back European and Israeli startups. CNBC article here

• Uber invests in food delivery with one of Taiwan’s largest international acquisitions ever. Quartz article here

• Tom Brady explains why he bought an Electric Boat Racing (E1) team. FOS video here.