The investment portfolio of the $31.9 billion Texas County & District Retirement System (TCDRS) returned a robust 3.21% for the second quarter of the year to boost its first half 2019 total returns net of fees to 9.94%, according to the system’s most recent quarterly investment results.
For the fiscal year ended June 30, the fund returned 6.4%, beating its policy benchmark portfolio of 5.7%, and raising its total market value to over $31.9 billion from $30.2 billion at the same time last year.
The fund also reported three-, five-, and 10-year annualized returns of 9.5%, 5.9%, and 9.2%, respectively, surpassing its benchmark portfolio’s returns of 8.7%, 5.1%, and 8.3%, respectively for the same time periods.
Over the longer term, the fund continued to outpace its benchmark. TCDRS’ annualized returns over the past 15, 20, and 30 years were 6.8%, 6.9%, and 8.0%, respectively, compared to its benchmark portfolio’s returns of 6.1%, 6.1%, and 6.9%, respectively, over the same time periods.
The retirement system’s target asset allocation is 30% in equities, 25% in credit, 18% in private equity, 13% in hedge funds, 11% in real assets, and 3% in investment-grade bonds.
Within equities, the fund has allocated 10.5% to US equities, 10% to international developed market equities, 7% to international developed market equities, and 2.5% to global equities. Within credit, the fund has allocated 12% to strategic credit, 11% to direct lending, and 2% to distressed debt. And within real assets, the allocation is 6% in private real estate, 3% in master limited partnerships, and 2% in real estate investment trusts.
The allocation was adjusted in April, and the current allocation represents a 5% decrease in hedge funds, a 4% increase in strategic credit, a 2% increase in private equity, a 1% increase each in global equities and direct lending, and a 1% decrease each in US equities, international developed market equities, and international emerging market equities.
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