After this wild ride with the stock market, why is CalSTRS still investing in stocks?

CalSTRS, as a “forever” investor, considers the long-term value of investments rather than short-term market activity. Despite the greater risk, equities provide a higher return over the long term than bonds.

Historically, more than 55 percent of CalSTRS benefits are paid from investment earnings. It is clear that reducing our investment in equities and increasing our exposure to bonds will increase the cost of the benefits to employers and, ultimately, the taxpayer.

While the stock market continues to prove an essential part of the CalSTRS investment portfolio, CalSTRS is increasingly diversifying its portfolio into areas such as the Inflation Sensitive asset class. This new asset class helps hedge the portfolio against inflation to include using more treasury inflation-protected securities.

Also an innovation and risk unit was created within the Investment Branch to look into new investment strategies, implement pilot programs and evaluate their effectiveness.