CalSTRS investment committee approves revisions to Risk Mitigating Strategies policy
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Summary
The CalSTRS Investment Committee voted to adopt updated policy language reframing RMS as a portfolio, broaden substrategy ranges and add the terms “defenders” and “diversifiers.” The committee moved the item from information to action and approved it by roll-call vote.
The California State Teachers Retirement System (CalSTRS) Investment Committee voted to adopt policy revisions for its Risk Mitigating Strategies (RMS) program on March 12, 2025, approving changes that reframe RMS as a portfolio rather than an asset class and add new descriptive categories for underlying strategies.
The committee moved the item from information to action and approved the revisions in a roll-call vote after staff and consultants described the proposed changes. Senior investment director Geraldine Jimenez and RMS staff presented the revisions; Jeff Jarrow, speaking for the RMS team, said the policy would add “defenders” and “diversifiers” to clarify each substrategy’s role. Jarrow described defenders as “those strategies that are generally the most responsive during a market crisis,” and explained that broadening substrategy ranges would reduce forced rebalancing and allow staff more flexibility to position the portfolio for volatile markets.
CalSTRS staff and outside consultant Makita Investment Group told the committee they supported the changes. Makita’s Noma Malone said the defender/diversifier framing is a “helpful way to frame the context” and concurs the edits will modernize and simplify the policy’s language.
The motion to consider the RMS policy as action was moved by Trustee Karen Yamamoto and seconded by the state controller. The roll call recorded the following votes in favor: Director of Finance Whitaker (yes), Controller Cohen (yes), Mr. Tang (yes), Trustee Yamamoto (aye), Trustee Bradford (yes), Trustee Hendricks (yes), Mr. Gunning (aye), Mr. Ruffino (yes), Mr. Garfinkel (yes), Mr. Juarez (aye) and Chair Keeley (aye). No nay votes or abstentions were recorded. The committee chair announced, “The motion passes.”
Staff described several targeted wording changes: removing the term “separate account” where it could be confusing, standardizing delegated authority language to reference the senior chief investment officer, and clarifying authorized-staff trading controls to align with enterprise governance practices. April Wilcox, director of investment services, described the trading-authority wording as a governance control intended to strengthen operational safeguards across portfolios.
Committee members asked for clarity on how RMS interacts with CalSTRS’ broader diversifying allocation (fixed income, cash and RMS) and on scenarios in which RMS might not perform as intended. RMS staff said the portfolio contains multiple substrategies to address different shock types and that the policy edits are intended to allow continued evolution and addition of new substrategies as appropriate. Staff noted Makita performs quarterly due diligence and reports to the committee on RMS activity.
The committee approved the policy changes and directed staff to implement the revised RMS policy framework and continue reporting on performance and any proposed additions to the RMS portfolio.
Votes at a glance: Motion (move RMS information item to action and adopt revised RMS policy): mover — Trustee Karen Yamamoto; second — Controller Cohen; outcome — approved; roll-call recorded above.
The committee scheduled additional discussion of RMS and related tactical positioning in closed session later in the day, consistent with staff’s statement that some investment-specific details are appropriate for closed sessions.
