California teachers’ pension fund plans to hire China-focused equity managers for the first time
The California State Teachers’ Retirement System (CalSTRS) plans to appoint China-focused equity managers for the first time ever, as demand for asset diversification rises amid concerns about inflation and recession.
CalSTRS held about $3.7 billion in investments in Chinese stocks at the end of June through internally and externally managed strategies, the No. 2 U.S. pension fund said in a statement to Reuters.
The fund launched a request for proposals (RFP) for fund managers last month with a plan to establish new investment categories targeting Chinese equities. Interested funds had to respond to the proposal by October 10.
The purpose of taking proposals from China-focused managers is “to find out if there can be a better way” to implement existing exposure to Chinese equities, the pension manager said in the statement.
CalSTRS’ plan comes as asset allocation to Chinese equities by deep-pocketed U.S. institutional investors has broadly stagnated in recent years due to rising geopolitical tensions.
Some of the big China-focused Asian hedge funds are also buying more non-Chinese stocks as regulatory scrutiny, political uncertainties and a slowing mainland economy force them to reduce their exposure to offshore Chinese assets.
However, recent moves by some major investors suggest they are looking for geographic and asset diversification as the Western world grapples with tighter Federal Reserve policy and an energy crisis in Europe, according to insiders at the Bank. industry.
Under the new plan, CalSTRS, which had assets worth about $311.7 billion at the end of July, plans to establish three categories of investment strategies targeting China, according to the call. offers posted on its website.
While two of them will focus on Greater China stocks and onshore Chinese stocks, the latter will be indexed to the MSCI China index, according to the tender.
“Based on the results of our due diligence of the tenders, we (CalSTRS) would create new China portfolios if we determined that would be a better way to implement our existing exposure to Chinese equities,” he said. said in a statement to Reuters.
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