Texas Teacher Retirement System, Austin, outperformed its benchmarks in all periods ended March 31, according to a performance report from Hewitt EnnisKnupp, the consultant to the pension fund's board of trustees.
As of March 31, the pension fund and benchmark returns, respectively, were: for the quarter, 3.6% and 3.4%; one year, 10.4% and 9.3%; three years, 10.1% and 9.9%; five years, 4.8% and 4.6%; 10 years, 8.6% and 8.4%; and since inception (June 30, 1991), 8.8% and 8.3%.
Major sources of outperformance in the quarter ended March 31, HEK's report said, were directional hedge funds, which returned 4.8%, topping the benchmark return by 1.4 percentage points.
The pension fund's strategic partnership network, which is composed of five external money managers running a total of $6 billion, in aggregate consistently outperformed the program's customized aggregate benchmark as of March 31. For the quarter, the SPN returned 4.5%; for one year, 10.5%; and three years, 10.5%. The benchmark returned 3.9%, 9.6% and 10.2%, respectively, for the same periods.
HEK's report noted that of the four strategic partners with a three-year track record in the program, only BlackRock, which managed $1.3 billion for the Texas fund as of March 31, underperformed the benchmark with a 9.6% return for the three-year period.
The other managers in the program are J.P. Morgan Asset Management and Neuberger Berman Group, which each managed $1.4 billion for TRS and returned 10.9% and 10.5%, respectively for the three-year period. Morgan Stanley Investment Management ran $1.3 billion as of March 31 and returned 10.5% for the three-year period. Barclays Capital managed $600 million as of March 31 and has not reached its three-year anniversary.
All multiyear Texas TRS and benchmark returns are annualized.
In its presentation to the Texas TRS board, HEK showed that investment returns of $4.1 billion outpaced net withdrawals of $980 million in the first quarter of 2013 to raise total assets of the retirement system 2.7% to $117.5 billion.