Texas Teachers chalks up 2.6% quarterly return, sets alternatives pacing for next fiscal year

Texas Teacher Retirement System's assets rose 1.9% to $132.4 billion on strong returns during the three-month period ended March 31.

The Austin-based pension fund's returns topped the policy index for every measurement period ending March 31: quarter, 2.6% (benchmark, 2.3%); one year, 8.5% (benchmark, 8%); three years, 9.97% (benchmark, 9.3%); five years, 9.98% (benchmark, 9.6%); and 10 years, 7% (benchmark, 6.8%).

The board's investment consultant, Aon Hewitt Investment Consulting, presented returns to trustees at their quarterly meeting Thursday.

TRS investment officers also updated trustees about planned commitments totaling $14.4 billion to private equity, real assets, and energy and natural resources asset classes for the next fiscal year ending Aug. 31, 2016.

The pension fund's investment division has earmarked $4.7 billion for commitments to private equity funds and $1 billion for direct and co-investments in fiscal year 2016, according to a report by Neil Randall, senior director. As of Dec. 31, the retirement plan had $15.8 billion invested or committed in private equity funds and $4.3 billion in private equity direct and co-investments.

In real assets, TRS dedicated $5.7 billion for fund commitments and $1.4 billion to direct and co-investments for the 12 months ending Aug. 31, 2016, said Grant Walker, senior director, in his report to the board. As of year-end 2014, TRS had invested or committed $16.1 billion in real assets funds and $12.2 billion in direct and co-investments.

From the energy and natural resources asset class, John Ritter, senior investment manager, and Carolyn Hansard, investment manager, said in their report that fiscal year 2016 will see $800 million committed to funds and $800 million to direct and co-investments. As of Dec. 31, TRS had invested or committed $2.2 billion to funds and $1.2 billion to direct and co-investments.