CalSTRS investment committee outlines 'shared vision' to stay a top global allocator, eyes technology and staffing investments

CIO Scott Chan and senior staff presented a proposed "shared vision" for CalSTRS’ Investment Division, framing long-term objectives to maintain the fund’s position as a top global allocator and describing near-term steps including a July offsite, a first reading in September and board approval targeted for November.

Scott Chan said diversification, liquidity management and implementation are central to the plan and defended continued allocations to private markets and alternatives as a diversification tool. "That’s why I call it 45 to 50% of our portfolio is in the private markets and alternatives," Chan said, adding that private markets provide uncorrelated cash flows and inflation protection.

Geraldine summarized the process used to develop the proposal — staff surveys, working groups, peer visits and stakeholder engagement — and outlined five focal areas: mission clarity, world-class talent, smart execution (including technology), organizational agility and partner-of-choice relationships. She said staff will present a concrete "bold goal" and performance metrics at the July offsite and that the action plan will feed into the organization's three-year strategic plan.

On implementation, staff highlighted fee savings tied to in‑house activity and the collaborative model: presenters said CalSTRS has captured roughly $2.6 billion in estimated fee savings over recent years and has generated excess returns above benchmarks. Geraldine and Scott said the investment branch will request staffing and technology resources in the fall, with specific staffing requests previewed at the July offsite.

Scott also announced an internal promotion: Josh Diedesch will be promoted to director of the Total Fund Management Division to lead asset allocation, balance-sheet management and support the one‑fund approach. The committee recognized summer interns in the audience.

Trustees asked about oversight and how legal counsel will review potential fiduciary implications of AI and underwriting tools; staff said a legal opinion is being developed and that the topic is on staff’s radar. The committee signaled further education and engagement at upcoming meetings and the July offsite.

Next procedural steps: staff will engage committee members at the July offsite for facilitated workshops, return a first reading in September, and present a final recommendation in November. The report will then inform staffing and budget requests tied to technology and portfolio resiliency.