CalSTRS staff gave the board's Investment Committee an update on the Total Fund Management Division at the September meeting.

The main goal for the division is to build and maintain a resilient, globally diversified total portfolio. The division works with all the asset classes and focuses on overall risk and return factors for the total fund.

To achieve that goal, the division focuses on asset allocation, balance sheet management, and portfolio risk. Combining these functions under a single team allows for direct integration of asset allocation decisions with risk while ensuring CalSTRS has enough cash for immediate payments without risking future earnings in all market environments.

The division completed a review of total fund resiliency to assess overall portfolio diversification, identify risks to the fund and potential opportunities to improve portfolio resiliency, and to make recommendations to Chief Investment Officer Scott Chan.

The review found:

• No major gaps in the portfolio vs. the policy benchmark;
• No unknown exposures or surprises;
• Equity and economic growth are the largest sources of risk to the fund;
• The fund has a large exposure to the United States.

Staff told the board that they continue to recruit for open positions that will enhance expertise and build capacity to help the division continue to add value.