The California State Teachers’ Retirement System (CalSTRS) posted a 7.7% net return for 2024, beating its 7% benchmark, according to an investment report released ahead of its March 12 investment committee meeting.

Private equity played a key role, generating an 8.9% return and surpassing its 7% benchmark. This strong performance highlights CalSTRS’ effective private equity strategy, which now accounts for 15.4% of its $349.7bn portfolio.

Among asset classes, private equity was one of the top performers, trailing only public equities (16.9%) and collaborative strategies (11.1%). The report credited direct lending exposure for collaborative strategies’ success, while infrastructure and commodities fueled an 8.4% gain in inflation-sensitive assets.

Private equity remains a key driver of CalSTRS’ long-term returns. Over the past 10 years, the pension fund has posted an annualized return of 7.8%, exceeding its 7.4% benchmark. Its 30-year average stands at 8.1%, well above the 7% target.

Currently, CalSTRS allocates 15.4% of its portfolio to private equity, slightly above its 14% target. The fund continues to expand its private equity exposure, using direct investments and partnerships to optimize risk-adjusted returns.

While most asset classes performed well, real estate struggled, delivering a -9.7% return and falling short of its -8% benchmark. Fixed income (1.8%) and risk-mitigating strategies (2%) posted modest gains, while inflation-sensitive investments (8.4%) benefited from rising commodity prices.

With private equity outperforming expectations, CalSTRS remains committed to alternative assets, balancing risk and returns across market cycles.