Texas Permanent’s one-year return falls short of benchmark

Texas Permanent School Fund, Austin, returned a net 6.1% in the year ended June 30, trailing the 6.4% return of the benchmark of the $34.6 billion fund.

By comparison, the net return of the educational endowment was 8.1% in the year ended June 30, 2018, topping the 7.9% return of the aggregate benchmark, fund documents showed.

Annualized net returns of the Texas PSF for periods ended June 30 were 8.7% over three years (benchmark, 8.4%); five years, 5.5% (5.3%); and 10 years, 9.1% (8.8%).

The fund's strategic target asset allocation is 14% developed international and emerging market large-cap equity; 13% each U.S. large-cap equity and private equity; 12% U.S. fixed income; 10% each real estate and hedge funds; 7% each risk parity and emerging market debt; 5% U.S. smidcap equity; and 3% each emerging markets equity, Treasury inflation-protected securities and commodities.

PSF's private equity portfolio produced the highest net return over the 12 months ended June 30 at 12.1% (benchmark, 11.1%), followed by U.S. large-cap equity, 10.6% (10.4%); risk parity, 9.1% (9.9%); U.S. fixed income, 8.3% (7.9%); emerging market debt, 7.9% (9%); real estate, 7.6% (5.8%); TIPS, 5% (4.8%); hedge funds, 2.8% (1.5%); developed international and emerging market large-cap equity, 1.7% (1.3%); emerging market equity, 1% (1.2%); U.S. smidcap equity, -0.4% (-0.6%); and commodities, -7.1% (-6.8%).