Texas-based public pension plans produced an annualized composite return of 8.2% for the 20-year period ended Sept. 30, above the 8% average annualized actuarial return of the 60 plans that participated in a recent Commonfund survey conducted for the Texas Association of Public Employee Retirement Systems.
The average dollar-weighted asset allocation of the Texas public pension funds as of Sept. 30 was 31.8% alternatives, 24.6% international equity, 22.6% domestic equity, 20% fixed income and 1% cash/other, little changed from the prior year, said Joe Gimenez, a TEXPERS' spokesman, in an interview.
But the aggregate assets of the 2013 survey universe were vastly larger, at $170.3 billion, than the $23.8 billion reported as of Sept. 30, 2012, according to Commonfund's report on its survey results.
Not only was the 2013 universe larger, with 60 participants compared to 53 in 2012, two of the new entrants were Texas megafunds: Texas Teacher Retirement System and Texas Employees Retirement System. As of Sept. 30, the Austin-based funds had assets of $119.6 billion and $26.6 billion, respectively, which were largely responsible for bumping up the universe so significantly, TEXPERS said in a news release.
Size was not a good predictor of the best annualized performance for the 20 years ended Sept. 30, Commonfund survey data showed.
The best-performing fund in the TEXPERS' universe for the 20 years was the $10.9 million Big Spring (Texas) Firemen's Relief & Retirement Fund, which returned an annualized 9.75%. In an interview, Thomas Ferguson, plan administrator, attributed the pension fund's consistent good performance to Westwood Management, which runs the pension fund's portfolio.
The $3.4 billion Dallas Police & Fire Pension System was the second-best performer in the period, with an annualized 9% return, while the $1.9 billion El Paso Firemen & Policemen Pension Fund was third with 8.9%.