CalSTRS

Um, so we're, my wife and I are about to be on Baby Step 4, uh, which I'd love to share how we did that.

Um, we're both educators, uh, and contribute to CalSTRS.

Um, we're contributing about at, to our 403(b) as well, uh, as the CalSTRS through work, which equals about 10%.

Once we get to Baby Step 4, do we bump up our 403(b) contributions, invest more in mutual funds, open up a Roth? Um, just kind of excited about getting to Baby Step 4, and what do I do when I get there?

I really love that question, and just for the listening audience, Baby Step 4 is the baby step after you've paid off your debt, after you've saved up three to six months of expenses, where you get to invest 15% of your gross income.

We're gonna go through the takeaways, I suppose, from this transition acceleration framework which comes from three different creators, really kind of maybe household names, I suppose, to many of us.

CalSTRS, that's Cal S-T-R-S, one of the world's largest pension investors, roughly $400 billion of assets, generate capital, a leading sustainable infrastructure investor, something like 15, $16 billion they are managing.

and Rhodium Group, a leading nonpartisan climate and energy research firm.

So again, the question here is if you could invest one more dollar in climate or when you do that, where would it remove the most CO2, most greenhouse gases? Most of us have or are required to optimize for project returns, totally get that.

On a much larger scale, though, I think one of the reasons that- I was motivated beyond just my own convictions about genocide in Gaza and the ethnic cleansing of Palestine that is ongoing.

One of the things that I think that, uh, a lot of educators start to realize very quickly is how they are complicit personally, and I think that when you are a member of this profession, a public school teacher in the fifth-largest economy in the world in California who contributes to a pension fund like CalSTRS, which is the largest of its kind, it becomes very clear that you actually do have a lever of power.

You feel powerless with these types of large issues, one in which your own government is actively funding and cheering on th- this, this genocide and displacement.

And so my colleague and I decided that we had tried the internal methods, organizing within sort of like what Robert's Rules of Order allow us to do within our areas, chapters, and then in a broader scope at the House of Representatives, which is the, as I mentioned earlier, the legislative body of UTLA.

We need to have this.

And this is not only the Black Rocks, but you got CalPERS and CalSTRS and all the local pension funds, firefighters, police fighter pension funds, local.

So tell us a little bit about that industry.

A lot of people have been talking about how AI is going to disrupt them.

When the long bond gets to 7.5%, now you're talking.

Now all of a sudden it's like, okay, a pension funds, CalSTRS, CalPERS, all the various ones.

Now all of a sudden they can say, you know what? We can meet our actual assumptions with no risk.

Let's just do it.

We met our colleagues, Bivium Capital Partners, my counterpart, Lawrence Bancroft, in sort of the depths of 2020, in which I think lots of folks were doing sort of a form of introspection of like, how do we have broader impact? How do we do more during this extraordinary time in America and our world? And for us, Bivium Capital Partners had started as an emerging manager of manager, managing assets for some of the largest asset owners in the world, in fact.

organizations like CalPERS and CalSTRS, New York City Common Retirement Plan as well, and West Fuller having started about 11 years later in 2011 as a values aligned investment advisory firm and really seeing both the depth of institutional investment expertise, so sourcing and selecting the very best investment managers with our background at West Fuller being sort of values aligned investment advisory work with families and charitable institutions and seeing a real opportunity for us to have a greater form of impact.

So it started first with mission and purpose.

And we were very fortunate to win one of our early mandates in the end of 2020, which became an extraordinary springboard for us to win our next mandate, which was over $500 million, which kind of put us on the map for Outsource Chief Investment Officer practices.

second part is, okay, well, what do you do with it? If you're an active investor, say if you were an active pension fund or something, well, yeah, you could get in there, you could divest, you could choose, or you could work with these organizations to become better organizations.

That's what a lot of CalPERS, CalSTRS are renowned for that.

Sovereigns are not renowned for being active investors, right? They divest usually.

If you come up with a project that says, hey, I've got 500 million worth of projects in Central Africa that really should be divested in.

So they're kind of a controversial form of finance.

But in this sort of early 2020 periods, when we have this kind of period of ESG, we're A lot of these pension funds like the California Teachers Retirement Fund said, hey, you know, private equity, we've been giving you money for a decade.

You've made a lot of investments.

Some of them have turned out well, but a lot of them have been in industries like oil and gas.