August 16, 2019 04:04 PM

Austin City Employees returns 6% for year, behind its benchmark

Austin Employees' one-year performance lagged the benchmark for the year, but met or exceeded it over longer periods.

City of Austin (Texas) Employees' Retirement System's 6% net return for the year ended June 30 lagged the 6.9% return of the pension fund's policy benchmark, but met or exceeded the benchmark over longer periods, an investment report from the $2.7 billion pension fund showed.

Net returns for the pension fund as of June 30 were 8.7% over three years (benchmark, 8.7%); five years, 5.5% (5.3%); seven years, 7.9% (7.8%); and 10 years, 9.2% (8.7%).

All multiyear net returns as of June 30 are annualized. COAERS' fiscal year-end is Dec. 31.

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COAERS' broad asset-class allocation as of June 30 was 34.6% U.S. equity, 19.7% global fixed income, 17.5% non-U.S. developed market equity, 9.1% real estate, 8.4% emerging market equity, 5.1% multiasset class strategic partnership, 4.7% risk parity, and 0.9% cash and equivalents.

Performance of COAERS' U.S. equity strategies for periods ended June 30 were one year, 7.7% (benchmark, 9%); three years, 12.7% (14%); five years, 9.2% (10.2%); and 10 years, 14.1% (14.7%).

Non-U.S. developed market equity investments as of June 30 returned 0.1% (benchmark, 1.3%); three years, 10.2% (9%); five years, 4.1% (2%); and 10 years, 9% (6.8%).

Performance of COAERS' emerging market equity strategies for periods ended June 30 was 5% (benchmark, 1.2%); three years, 10.7% (10.7%); five years, 2.6% (2.5%); and 10 years, 5.8% (5.8%).

For periods ended June 30, global fixed income returned 8.7% for the year (benchmark, 7.5%); three years, 2.7% (2.2%); five years, 3.1% (2.9%); and 10 years, 4.3% (3.9%).

The defined benefit plan's real estate portfolio for periods ended June 30 returned 7% for the year (benchmark, 11.2%); three years, 8.1% (8.5%); five years, 10% (9.8%); and 10 years, 9.7% (9.8%).

The multiasset class strategic partnership managed for COAERS fund by BlackRock returned 6.5% for the year ended June 30 (benchmark, 6.97%). The inception date for the customized fund was July 1, 2018.

Risk-parity strategies returned 8.4% in the 12 months ended June 30 (benchmark, 8.3%); three years, 6.4% (5.4%); and five years, 2.9% (3.5%). COAERS began investing in risk-parity approaches Feb. 1, 2014.

Cash and cash equivalents returned 2.8% in the year ended June 30 compared with the 2.3% return of the benchmark and 6.2% over three years (benchmark, 1.3%). The pension fund began investing in the cash strategy on July 1, 2017.