CalSTRS Completes Investment Staff Restructuring

Hiring of a Chief Operating Investment Officer and directors for two asset classes completes investments leadership restructuring.

The California State Teachers’ Retirement System (CalSTRS) announced today the completion of its Investment Branch leadership restructuring with the hiring of its first Chief Operating Investment Officer and two asset class directors.

Debra Smith has been selected CalSTRS Chief Operating Investment Officer (COIO). Glenn Hosokawa was named director of the .4 billion asset class, Fixed Income, the funds’ second largest. Paul Shantic was named director of Inflation Sensitive, the newest and smallest asset class with an investment portfolio at .4 billion.

“These three appointments, coupled with our 2010 creation of a Deputy Chief Investment Officer, complete a new organizational structure that allows us to bring more assets in house,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “This structure matches what you find in most large investment money managers. This also fits our plans to internally manage more of our assets—currently at 45 percent in-house—to a projected 60 percent internally managed.”

The new structure has the COIO overseeing Investment Operations, Branch Administration, and a new unit comprised of Compliance, Internal Controls, Ethics and Business Continuity. The new position will also directly report to the Investment Committee twice per year. This fulfills a goal of CalSTRS’ internal auditors, who recommended the separation between investment management and investment operations.

“This new structure puts in place a smoother operation for a portfolio of our size and allows for better oversight by the board, the Deputy CIO and myself,” said Mr. Ailman, adding that: “The competition for these positions was very intense and was nationwide in scope, which speaks well for the quality of the talent we have in house.”

All three moved up from high-level positions in CalSTRS. Ms. Smith was director of investment operations. Messrs. Hosokawa and Shantic were acting co-directors of Fixed Income. All three come with deep knowledge and experience in finance and investment management and operations.

CalSTRS’ inaugural COIO, Ms. Smith, has risen through the ranks at CalSTRS from associate investment officer in 1998 to director of investment operations in 2010. She holds a Bachelor of Science degree from California State University, Fresno in business administration, finance and marketing. In 2012 she received a certificate as a graduate of the CalSTRS Management Academy. Ms. Smith is currently enrolled in the CalSTRS Executive Development Program with a graduation date of November 2014.

“I look forward to collaborating with investment management at CalSTRS and with our strategic business partners to put in place adaptive and innovative solutions to achieve our mission, which is securing the financial future and sustaining the trust of California’s educators,” Ms. Smith said.

Mr. Hosokawa also rose through the CalSTRS ranks from his entry as an Investment Officer I in 1998 to Portfolio Manager in 2005, where he oversaw the rates portfolio and, most recently, the currency management program and the securities program in Fixed Income. In 2012, Mr. Hosokawa was named acting co-director of Fixed Income when then-Director Michelle Cunningham was named acting Deputy Chief Investment Officer. She was named to the permanent position on June 1, 2014.

Mr. Hosokawa holds a Bachelor of Science in business administration from UC Berkeley and is a Chartered Financial Analyst.

“I’m honored to have been selected for this position and I look forward to helping guide Fixed Income into its future as a key asset to the overall portfolio,” he said. “I’m also excited to find new ways to help Fixed Income continue generating value in an increasingly complex and challenging market.”

Mr. Shantic served alongside Mr. Hosokawa as acting co-director of Fixed Income before being elevated to lead the newly formed Inflation Sensitive asset class. He arrived at CalSTRS in 1994 from Ventura County managing the short-term portfolio for the Treasurer-Tax Collector and rose to Portfolio Manager at CalSTRS Fixed Income in 2005, overseeing the corporate bond portfolio.

Mr. Shantic holds a Bachelor of Arts in political science and philosophy from the University of Redlands, an MBA from California Lutheran University, a master’s degree in security analysis and portfolio management from Creighton University, a Master of Arts in government from Claremont Graduate University, and a Master of Public Administration from California State University, Northridge.

“I am looking forward to expanding the asset class and working with a new team to build a portfolio that will position us to meet the challenges we will be confronting,” Mr. Shantic said.

The California State Teachers’ Retirement System, with a portfolio valued at 6.4 billion as of September 30, 2014, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California’s 868,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.

Posted On: West Sacramento, CA November 07, 2014