Texas Teacher Retirement System, Austin, saw its assets rise to $187.7 billion as of June 30, compared to $185.4 billion on April 1, a report from the pension fund staff showed.
Global equity was cited as one reason for the growth.
"We've just been amazed to see global equity just continues to power through," said Jase Auby, chief investment officer at the pension fund.
The global equity portfolio returned 4.1% over the quarter, 9.2% for the first half of 2023 and 8% for the year ended June 30, TRS' report showed.
Global equity wasn't the sole outperformer. "One real bright spot for us and a lot of other people has been credit," Auby said.
The system groups credit funds in its stable value portfolio and considers it absolute return. The stable value portfolio returned 9.3% in 2022 and 6.4% for the year ended June 30, 2023.
"As of June 30, we've seen continued strong performance since then," he said. "It's very clear why so many people are interested in credit these days."
He added that "for most of our careers, fixed income has been a difficult asset class to invest in for a pension fund because you have a 7% return hurdle and you know that credit is at 5%. You know you're underperforming, but as rates have risen ... it has certainly made these fixed-income asset classes much more attractive."
"I think you can really say fixed income is back," he said.
The investment team also is planning ahead for a potential decline in public equities.
"The way we are positioned now we definitely have a risk-off mindset, so we are underweight public equity," Auby said. "We're underweight Treasuries and then we're overweight credit. So we are concerned about a potential drawdown in public equities, particularly if there's a recession in 2024, which we think (is) likelier than not."