Texas Teachers System Returns 6.4%, Misses Benchmark

Global equities spur 3.2% return for second quarter.

The $156.4 billion Teachers Retirement System of Texas (TRS) returned 3.2% for the second quarter, and 6.4% for the 12 months ending June 30, missing its benchmark returns of 3.4% and 6.7% respectively.

However, the system also reported three-, five-, and 10-year returns of 9.5%, 6.7%, and 9.9% respectively, which beat its benchmark’s returns of 8.8%, 6.4%, and 9.3% over the same time periods.

“Global equities continued to rally off a strong first quarter with optimistic trade talks and a looming US rate cute helping boost returns,” TRS CIO Jerry Albright wrote in a report that was presented at a Sept. 19 meeting of TRS’ investment management committee. “The US nominal yield curve shifted downwards over the quarter with yields falling across all maturities, resulting in the strong returns shown for the stable value and risk parity components.”

Private equity ,returned 10.7% for the year ended June 30, however, this was below the private equity benchmark return of 11.9%. Public equity returned 3.5% during the same time period, below its benchmark return of 4.5%. Directional hedge funds returned 2.1%, beating thebenchmark by a full percentage point.

For the 12 months ended June 30, the top-performing asset class for the system’s stable value portfolio weretreasuries, which returned 12.7% and beat thebenchmark return of 12.3%. Absolute return strategies earned 6.8% for the 12 months ended June 30, easily surpassing theirbenchmark’s return of 4.6%. Stable value hedge funds returned 2.2%, just beating its benchmark return of 2.1%.

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