Texas public employee pensions slightly increased investments in real estate, private equity and energy, while decreasing exposure to US domestic stocks and bonds in 2013, according to a Commonfund Institute report.
The “Report on the Asset Allocation and Investment Performance of Texas Public Employee Retirement Systems,” released at the 25th Annual Conference of the Texas Association of Public Employee Retirement Systems, shows that FY2013 dollar-weighted asset allocations were 32% alternative strategies (real estate, private equity, energy, etc.), 25% international equities, 22% domestic equities, 20% fixed income, and 1% short-term securities/cash.
The 60 survey respondents represented approximately $170 billion in total assets in 2013, compared to $24 billion for 52 reporting respondents in the 2012 report. The increase in survey respondent’s assets reflects inclusion this year of assets and returns from the Employees Retirement System of Texas and the Teachers Retirement System of Texas.
The key 10- and 20-year average rates of return were 8.1% and 8.2%, respectively, and compared favorably to the 8.0% average actuarial investment return assumption. These returns are slightly lower than those found in the 2013 report, attributable to the larger sampling size.
Overall, the reporting local pensions again beat the 8.0% composite average assumption rate in one-, three-, ten- and 20-year return periods. The five- and 15-year returns were again slightly below the assumption rate, reflecting bear markets in 2008 and 2002.
“Texas pension systems continue to do a great job of staying focused on long-term investment horizons,” said Max Patterson, executive director for TEXPERS, an organization with 75 pension plans representing nearly two million active and retired individuals. “The slight increases in so-called alternative investments reflect continuing caution about US stock and bond market valuations, as well as the great opportunities in, say, domestic oil and gas drilling and shifts in real estate markets.”
The Texas Association of Public Employee Retirement Systems (TEXPERS) is a statewide voluntary nonprofit association to provide quality education to trustees, administrators, professional service providers and employee groups and associations engaged or interested in the management of public employee retirement systems. Today, TEXPERS’ 75 member systems represent approximately 2 million active and retired participants and approximately $165 billion in assets (www.TEXPERS.org).
© 2014 PEPD • Private Equity’s Leading News Magazine • 4-4-14