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A Role Model for the Public Pension Community

Chris Ailman, the chief investment officer for the giant California teachers’ pension fund, is retiring. He showed the way in navigating a landscape of complexity, hazards and challenges to achieve steady investment success.

Chris Ailman participating in an interview.
CalSTRS’ Chris Ailman is interviewed in 2022 by CNBC on the outlook for global markets. (CNBC)
The chief investment officer of the California State Teachers’ Retirement System is retiring after 24 years in that role. Throughout that time, Christopher Ailman has been a role model for the entire public pension community by patiently and selflessly guiding trustees and staff at the nation’s second largest public pension fund through the many minefields inherent in making megabillion-dollar investments while operating in a goldfish bowl.

Since his first year on the job in 2000, the public pension world has been battered by controversies and challenges. The dot-com bust took most systems by surprise as their healthy funding ratios evaporated. Stocks abruptly fell 37 percent only months after Ailman took office, and then took a second tumble in 2002. The Great Recession in 2008 again clobbered financial markets and pension fund portfolios. And of course the COVID-19 scare of 2020 sank the global stock market for a year before vaccines arrived.

Throughout these stormy markets, Chris developed his sea legs and was always the steady hand at the tiller. His professional counterparts at the larger and more tempestuous California Public Employees’ Retirement System down the road in Sacramento came and went in a constantly revolving door that epitomizes the complexity, hazards and challenges of leadership in the American public pension arena.

Without great fanfare, Chris and his team have reliably delivered investment performance that usually met actuarial assumptions and outshone most of their peers. Chris characteristically under-promised and over-delivered. I first met Chris when he was still a relative youngster working in the Sacramento County investment office in the 1980s, before he stepped up onto the big stage at the Washington State Investment Board. There, his professional, technical and interpersonal skills soon became obvious to everyone around him. (We briefly crossed paths again there, during the inception of the state’s hybrid pension plan.)

His later selection and appointment by CalSTRS really surprised nobody who was watching the musical chairs in this industry. Writing here back in 2007, before the global financial crisis, I dubbed Chris the chief investment officer of the year when he was warning his board that the system’s recent investment successes would not last forever and that it was time to hunker down as much as feasible for what would later prove to be a generational market washout.

Today, as he runs his final lap at CalSTRS, Chris deserves a respectful fresh accolade as an exemplar of humility, humanity, insight, talent and wisdom. He has deployed the goliath pension portfolio’s scale to stakeholders’ advantage by working hard to keep fees under control while fostering prudent portfolio allocations and pursuing cost-efficient strategies, including in-house portfolio management and maximum leverage in negotiating lower external manager fees for the benefit of the entire public pension community. From time to time he also has spoken softly with a big stick about ways that naked capitalism could and should do a better job for society at large, and still earn sustainable profits in the process for the benefit of pension stakeholders.

Chris will pass on to his successor — Scott Chan, who also was once a Sacramento County chief investment officer — a collaborative culture that is now embodied in a system-wide strategy that seeks to reward efficient and effective cost-cutting portfolio management.

He’s also taken the lead in public pension portfolio construction strategies. A lasting legacy of Chris’s team at CalSTRS may prove to be their shift in the last decade to a portfolio-level risk mitigation strategy that provides an offset to stock market risk. That’s especially true now that fee-free long-term Treasury bonds can provide more ballast to the portfolio by sporting yields closer to the portfolio benchmark, so that there should now be less need for the higher-fee components that drag down returns.

If we were to start a Hall of Fame for public pension investment management, it would have to induct Chris right alongside the legendary sage Allan Emkin, who founded the Pension Consulting Alliance before merging with Meketa after illuminating so many of us, and the Texas industry titan Britt Harris. Don’t be surprised if there is someday a coveted “Ailman Award” for outstanding acumen, achievements and servant leadership in public pension investing.

Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management. Nothing herein should be construed as investment advice.
Girard Miller is the finance columnist for Governing. He can be reached at
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