Second Largest US Pension Fund To Sell 12% Of Stocks Holdings In Advance Of "Another Downturn"

Zero Hedge ^ | Submitted by Tyler Durden on 09/02/2015 17:49 -0400 | Tyler Durden

[SkyPilot]

While many continue to debate if what with every passing day increasingly looks like a global recession, one from which the US will not decouple no matter how many "virtual portfolio" asset managers claim the contrary, there are those who without much fanfare are already taking proactive steps to avoid the kind of fallout that the markets have hinted in the past month of trading, is inevitable. Some such as Calstrs: the nation's second largest pension fund with $191 billion in assets (smaller only than Calpers), which as the WSJ reports is "considering a significant shift away from some stocks and bonds amid turbulent markets world-wide."

The move represents "one of the most aggressive moves yet by a major retirement system to protect itself against another downturn." A downturn which the pension fund implicitly suggests, is now inevitable.

According to the WSJ, the top investment officers of the California State Teachers’ Retirement System will move as much as $20 billion, or 12% of the fund’s portfolio, into "U.S. Treasurys, hedge funds and other complex investments that they hope will perform well if markets tumble, according to public documents and people close to the fund."

Actually considering the relative underperformace of hedge funds, which have largely underperformed the market both during the upcycle, and have fared no better during the volatility of the past month, Calstrs may want to just buy whatever Treasurys China has to sell. Which, incidentally, also answers a suddenly very pertinent question:

[SkyPilot]

....if China is selling US paper, who will buy it? Well, pension funds for one - the same entities who have had an abnormally heavy allocation to stocks in recent years, and now are seeking to cash out. Which while favorable for bond yields, is hardly good news for stocks - because in this illiquid market, and painfully thin tape, just who will buy the tens of billions of stocks that pension funds will decide to sell.

__________________________________________________________

You guys want to know "The Plan"?

After the soon approaching economic collapse, Obama, Pope Francis, and the UN announce they are forming new "cooperative" alliances between "finance and nations."

Their "solution" will enslave us all. Most of those who depend on pensions, stock dividends, or Social Security will happily go along with the slavery.

The bad times have not shown us anything yet. It is going to get much, much worse.

Stock Market Crash 2015: The Dow Has Already Plummeted 2200 Points From The Peak

[himno hero]

Trump needs to continue to stir the pot.

Obama is purposefully taking down western man by taking down America.

At some point, the people will wake up and be Americans again.

[P-Marlowe]

Why isn’t this fund fully diversified?

[Jack Hydrazine]

SHORT EVERYTHING!!!!

[Fractal Trader]

Sure, there could be a problem, but I wouldn’t count on a California public sector pension fund to the be one that got it right.

[willk]

They would announce this in advance??? Sounds like a rumor to me (stupid gold people!).

[Hostage]

Probably because every category is going down.

THe Hedge Fund performance overall may be fair to poor but I would think the pension funds are busy selling calls and purchasing puts to maintain asset values. A selloff like what is reported here seems to be pretty extreme especially if the predicted downturn or collapse doesn’t happen on the timescale chosen.

Public pension funds for some reason don’t impress me but they should have the best money managers and yet they suck for some reason. Maybe there are state laws in place that restrict them from doing business with some of the best traders, I don’t know.

[chit*chat]

Sounds so likely my hair is standing on end.

[AAABEST]

At some point, the people will wake up and be Americans again.

I'd like to think that, but all I see are of weak, low-information, compliant sheep being herded into their pens.

[MichaelCorleone]

“They would announce this in advance???”

I was thinking the same thing. If they want to sell at decent prices, giving the world advance notice is self defeating at least, and dereliction of duty at worst.

UNLESS, this is their part of a larger plan to absorb the Chinese selling of USTreasuries while at the same time tanking the stock market. A ‘twofer’ for 0bama and his cronies.