Calstrs investment chief Christopher Ailman to retire after 20 years

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Calstrs, one of the biggest US pension plans, is searching for a new chief investment officer after long-serving executive Christopher Ailman announced he was stepping down after two decades.

Ailman, who has served as CIO of the California State Teachers’ Retirement System since 2000, announced his retirement at a board investment committee meeting on Thursday.

Calstrs, which manages pensions for more than 1mn Californian educators, will commence a global search for a replacement for Ailman, who will stay in his role until the end of June.

“It has been an honour to lead and guide this massive global investment trust fund for the teachers of California,” said Ailman.

Harry Keiley, Calstrs’ retirement board chair, said under Ailman’s leadership, the fund had weathered two challenging decades of financial market downturns and bull markets. 

“He is a global leader and viewed as one of the top CIOs in the world.”

Calstrs will advertise for a new chief investment officer in February with the new person expected to be in place by July.

Richard Ennis, founder of Ennis Knupp & Associates, a consultancy that works with institutional investors and who has advised Calstrs, believes Ailman will be a hard act to follow.

“Chris has done a good job of managing the balance between sound investment principles and dealing with the overarching politics of the job,” said Ennis, adding “very few others stand out in this regard, in such a theatre”.

Ennis said Jason Malinowski, CIO of Seattle City Employees’ Retirement System, was a strong candidate to succeed Ailman. 

Ailman announced his retirement plans to the board at the same time as his investment team presented proposals to adopt riskier strategies, including a 10 per cent total fund leverage limit. 

The proposal, which was adopted by the board, will allow Calstrs to potentially borrow up to $30bn to help maintain liquidity without having to sell assets at fire sale prices. 

In recent years Calstrs has moved more deeply into private markets, such as private equity and commercial property, where assets are less easily traded.  

“We are not looking to immediately borrow capital but this an investment tool to utilise, particularly during market disruptions,” Scott Chan, deputy chief investment officer, told the board meeting,

“We have 42-43 per cent [of the portfolio] in private markets and alternative assets. We need the flexibility to rebalance that, particularly with cash flow issues [we face].”

Speaking at the board meeting, Josh Diedesch, portfolio manager with Calstrs, said leverage could magnify fund gains and losses. However, he said Calstrs’ leverage proposal was “low risk”.

Ailman’s departure means two of the biggest pension plans in the US are searching for new investment chiefs.

Calpers, the $452bn retirement plan that is America’s biggest, is in the advanced stages of appointing a replacement for its former CIO, Nicole Musicco, who resigned in September last year for family reasons.  

“Calpers is looking for a strong investor with broad experience, who is committed to our public service mission of ensuring the retirement benefits of 2 million people,” Marcie Frost, chief executive of Calpers, said in October.

The Calpers board is expected to be updated on the chief investment officer search, including interviews, at a meeting next week.