Texas Teacher Retirement System, Austin, posted a net return of 7.9% for the year ended Dec. 31.
The $207.3 billion pension fund’s return exceeded its policy benchmark return of 5.5% for the period, according to a performance report posted on its website.
For the three, five and 10 years ended Dec. 31, TRS returned an annualized net 2%, 7% and 7.3%, respectively, above their respective benchmarks of 0.4%, 5.8% and 6.5%.
TRS had returned a net 9.7% for the year ended Dec. 31, 2023. The pension fund’s fiscal year ends Aug. 31.
During the most recent fiscal year, the pension fund completed an asset allocation study, the results of which included the creation at its July 19 board meeting of a new target of 39% to "all-country" equities, the elimination of the 18% target to domestic equities and the reduction of dedicated targets to international developed markets equities and emerging markets equities to 5% and 1%, respectively, from their respective targets of 13% and 9%.
Because it was created in July, the all-country target does not have a one-year return available. TRS in its report said public equities as a whole returned a net 16% for the year ended Dec. 31, above its policy benchmark return of 14.2%.
The top performer among other asset classes was absolute return with a net return of 16.1% for the year ended Dec. 31 (above the benchmark return of 9.7%); followed by energy, natural resources and infrastructure at a net 13.6% (above its 6.8% benchmark); stable value hedge funds, net 10.5% (7% benchmark); private equity, 7.2% (7.1%); cash, 6% (5.4%); risk parity, 5.2% (5.2%); real estate, -3.3% (-8%); government bonds–nominal, -9.1% (-6.4%); and commodities, -22.9% (9.2%).
As of Dec. 31, the pension fund’s actual allocation was 35.7% all-country equities; 15.7% private equity; 14.4% real estate; 9% government bonds–nominal; 6.9% energy, natural resources and infrastructure; 5.3% stable value hedge funds; 4.7% each international developed markets equities and risk parity; 3.5% absolute return; 3% government bonds–real; 2.7% cash; 0.9% emerging markets equities; 0.1% commodities; and -6.8% asset allocation leverage. The total does not equal 100% due to rounding.
The pension fund’s long-term policy target is 39% all-country equities; 15% real estate; 12% private equity; 10% government bonds-nominal; 6% each ENRI and government bonds-real; 5% each international developed markets equities, risk parity and stable value hedge funds; 2% cash; 1% emerging markets equities and -6% asset allocation leverage.
