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apteacher

Cal Strs Returns

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I just received a Cal STRS publication that included the fund's returns over the last ten years:

 

Cal STRS returns: 2.5%

Benchmark returns: 2.5%

 

There's another argument for indexing. All of that money devoted to paying the best and the brightest for their investment acumen and ... the investment geniuses could not beat their benchmarks.

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AP, Is this information online?

Thanks for the post and good to hear from you AP. I don't know about anybody else, but I miss all of those wonderful posts and how you helped so many teachers over the years.

Our colleagues don't know how to thank people like us because investing is so esoteric. Anyway, you are on my mind and hope you are doing fine.

 

I have brought this up to Ed Derman, the director of communication, way back in 2004 at an open forum in San Diego. I asked why doesn't calstrs just use the Russell 3000 index and not just use it as a benchmark. He said and I will paraphrase, under no circumstances is CalSTRS going to change from active management to index investing, even though I made it clear that I was only talking about the domestic stock market allocation of the portfolio. I was NOT talking about bonds and other alternative investments where they would need managers. It’s incredible, hundreds of other pension plans use index investing because its a NO BRAINER. But apparently there are too many people trained in the old school of active investing and have not read Graham, Bogle, Buffett and especially Markowitz, the father, grandfather actually of MPT. And now the top brass said that Modern Portfolio Theory doesn't work!

 

I am going up to Sacramento in two weeks and I will see if I can get in my 2 cents.

 

Steve

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