Key Takeaways
- • CalSTRS reported its fund reached $415.4 billion, surpassing the $400 billion milestone, following a 13.9% return in fiscal year 2025-26 against a 0.4% benchmark, according to the retirement system.
- • Private equity, inflation-sensitive assets and risk-mitigating strategies were the strongest contributors, with real estate yielding $49.4 billion in the fiscal year ending June 30, 2026.
- • Private equity posted a 1.9% decline in the six months ending March 31, 2026, with the segment valued at $58.7 billion.
- • Economist Wayne Winegarden of the Pacific Research Institute attributed gains mainly to a bullish stock market rather than investment skill, and cautioned that the unfunded liability is not sustainably addressed.
- • As of 2025, the plan was only 79% funded relative to its obligations, according to Alpha Strategies' Jay Rogers, who said the fund is just over 20% short of its future obligations.
Summary
The California State Teachers' Retirement System (CalSTRS) announced that its fund reached $415.4 billion, a valuation that some economists attribute to a bull market in equities. The announcement was made at a September board meeting, where Chief Investment Officer Scott Chan called surpassing $400 billion "an extraordinary milestone" and said the figure represents the retirement security of more than 1 million California educators.
According to CalSTRS, the fund returned 13.9% in fiscal year 2025-26, well ahead of the 0.4% growth benchmark agency officials sought. Returns were strongest in private equity, inflation-sensitive investments and risk-mitigating strategies. Real estate, another allocation within the portfolio, yielded $49.4 billion in the fiscal year ending June 30, 2026. Private equity, by contrast, slipped 1.9% in the six months ending March 31, 2026, leaving that portfolio valued at $58.7 billion.
Jay Rogers, president and chief investment officer of Alpha Strategies Investment Consulting, said the results show CalSTRS management beating its benchmark. He noted, however, that as of 2025 the fund was only able to meet 79% of its funding obligations, leaving it just over 20% short of what the actuary says is needed to cover future obligations. He characterized the outperformance as helping the plan catch up faster, while pointing to New Jersey and Illinois, whose plans are roughly 39% to 40% funded, as cases where recovering lost ground is nearly impossible.
Wayne Winegarden, an economist with the Pasadena-based Pacific Research Institute, said the gains this year reflected a bullish stock market rather than necessarily smart investment decisions by agency officials. While acknowledging that a 14% return is a positive result, he cautioned that the unfunded liability has not been sustainably addressed.
CalSTRS officials declined to comment for the story. Assemblymember Tina McKinnor, D-Inglewood, chair of the Assembly Public Employment and Retirement Committee, called the results encouraging and said retirement security must remain a state priority.
According to CalSTRS, the fund returned 13.9% in fiscal year 2025-26, well ahead of the 0.4% growth benchmark agency officials sought. Returns were strongest in private equity, inflation-sensitive investments and risk-mitigating strategies. Real estate, another allocation within the portfolio, yielded $49.4 billion in the fiscal year ending June 30, 2026. Private equity, by contrast, slipped 1.9% in the six months ending March 31, 2026, leaving that portfolio valued at $58.7 billion.
Jay Rogers, president and chief investment officer of Alpha Strategies Investment Consulting, said the results show CalSTRS management beating its benchmark. He noted, however, that as of 2025 the fund was only able to meet 79% of its funding obligations, leaving it just over 20% short of what the actuary says is needed to cover future obligations. He characterized the outperformance as helping the plan catch up faster, while pointing to New Jersey and Illinois, whose plans are roughly 39% to 40% funded, as cases where recovering lost ground is nearly impossible.
Wayne Winegarden, an economist with the Pasadena-based Pacific Research Institute, said the gains this year reflected a bullish stock market rather than necessarily smart investment decisions by agency officials. While acknowledging that a 14% return is a positive result, he cautioned that the unfunded liability has not been sustainably addressed.
CalSTRS officials declined to comment for the story. Assemblymember Tina McKinnor, D-Inglewood, chair of the Assembly Public Employment and Retirement Committee, called the results encouraging and said retirement security must remain a state priority.
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