CalSTRS Invests in ABS Global Investments’ Emerging Markets Platform

The California State Teachers’ Retirement System has made a $200 million investment in ABS Global Investments’ ABS Insights Emerging Markets platform.

According to ABS, its $3.7 billion emerging markets platform centers on partnering with local specialists to take advantage of their expertise and understanding of their respective markets. The platform is managed by Guilherme Ribeiro do Valle, also an ABS founding partner.

“By partnering with local specialists with on-the-ground expertise in our stock selection, we’re able to uncover unique names, particularly in the mid and small-cap space, and provide differentiated returns,” Valle said in a statement.

The emerging market strategy is offered as a private fund, collective investment trust, mutual fund or segregated account structure. The platform includes long-short, long-only, and country- and region-specific equity strategies.

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The platform’s strategies include its Emerging Markets Long/Short strategy, Long Only strategy, China Long Only strategy, ex-China Long Only strategy and Insights Emerging Markets strategy.

The Emerging Markets Long/Short strategy is designed to provide returns in line with emerging markets equities, but with less risk over a full market cycle. The strategy targets a net exposure of 50% to 75% to market movements.

The Long Only strategy aims to outperform emerging markets equities over a full market cycle, and invests in stocks with all sizes of market capitalizations.

The China Long Only strategy is intended to outperform the greater Chinese equity markets and Taiwan over a full market cycle, while the ex-China Long Only approach is designed to outperform emerging markets outside of China over a full market cycle.

ABS’ Insights Emerging Markets strategy includes a diversified, all-cap core portfolio of approximately 150 to 250 stocks, has exposures to large-, mid- and small-cap stocks, and aims to “produce consistent and differentiated alpha.”

According to ABS, the CalSTRS investment is its first involvement with the $350 billion pension giant.

“We see this as the beginning of a long-term partnership,” Valle said.

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Tags: ABS Global Investments, ABS Insights, California State Teachers’ Retirement System, CalSTRS, Emerging Markets, Emerging Markets strategy, Guilherme Ribeiro do Valle

Exchange-traded funds saw $62 billion in inflows during April, the lowest total since April 2024, according to State Street’s monthly U.S.-listed ETF flash flow report.

“Inflows were also below recent averages, putting our $1.3 trillion full-year forecast in jeopardy,” the report stated.

April was a volatile month for stocks, although the month’s drawdown was mostly regained when indexes recovered near the month’s end. During the month, investors increasingly bought defensive ETFs.

Gold ETFs had $3.8 billion in inflows, the 10th-highest month on record, while equities saw $32 billion in inflows, of which 82% went into U.S. ETFs.

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Ultra-short and short-term government bond ETFs saw $19 billion in inflows, their second-highest since March 2020, which State Street attributed to uncertainty around policy.

“Inflows into ultra-short and short-term-government bond ETFs are likely to continue as defensive, anti-uncertainty positioning, rather than have expectations for rate cuts triggering moves out of cash-like investments in anticipation of lower yields,” State Street’s analysts wrote.

Small-cap equity ETFs saw $6 billion in outflows, their worst recorded month. Over the past three months, these ETFs have had $10 billion in outflows, nearly canceling out $10 billion in post-election inflows.

Credit instrument ETFs, including those investing in corporate and high-yield bonds, bank loan and CLOs, saw a total of $15 billion in outflows during April, making the month the worst ever for bank loan and CLO ETFs.

Investors also added $4.3 billion in inflation-linked ETFs during the month, a significant spike not seen since the height of the COVID-19 pandemic. According to State Street, investors increased their allocations to inflation-sensitive market segments at the highest level since 1981 as a result of market uncertainty.

“Unbalanced across assets, geographies, or economic regimes, these portfolios were built for a world with greater global cooperation, a less constrained Fed, heavy foreign capital flow into the US, and US equity dominance in terms of returns, profits, and productivity,” the State Street report stated. “Those trends are unlikely to persist in this new reality.”