It has been a frenetic and successful year for the Teacher Retirement System of Texas (TRS), a pension fund with $133.9 billion in assets under management.
The Austin-based LP ended the second quarter by committing $250 million to EQT VII and $100 million to Leonard Green & Partners’ LTF Co-Invest. A further $180 million went to Permira Advisers’ Ithaca fund and $150 million to Insight Ventures’ domestic venture/growth vehicle Star Trinity.
This was followed by another $150 million committed to Avenue Energy Opportunities Fund, a debt vehicle investing into the North American energy sector.
The private markets team, led by Eric Lang, Grant Walker and Neil Randall, allocates 32 percent of its fund to alternative assets and 11.73 percent, or $15.71 billion, to private equity, as of November 2014. Its target allocation for private equity is set at 13 percent, up from 11 percent last September.
Between March 2009 and February 2014 it committed $8.61 billion to private equity funds and $1.43 billion to direct private equity investments.
Looking ahead, TRS’s investment committee announced plans in June to pledge $14.4 billion to private equity, real assets and energy and natural resources until 31 August 2016.
In the first quarter of 2015, TRS’s asset returns were 2.6 percent, or $132.4 billion, up 1.9 percent from the previous quarter. In terms of benchmarks, quarterly, one-, three-, five- and 10-year time periods all beat their targets.
This was despite a report highlighting a drag on fourth-quarter 2014 results from poorly performing public equities. This setback was due mainly to underperforming domestic equities and an overweight allocation to emerging markets equities. Offsetting this, an overweight allocation to non-US developed market equities helped overall returns.
Like other LPs, TRS is reducing the number of fund managers looking after its investments and by the end of this year expects to have cut the number of GP relationships from 111 in September 2011 to 70.
Against this backdrop, on 12 June, Texas governor Greg Abbott signed a law establishing the Texas Bullion Depository, where gold and other precious metals normally kept by the Federal Reserve Bank of New York will be stored. Much of this is owned by the TRS along with fellow LP, University of Texas Investment Management Co.
TRS also recently changed its human resource policies to reflect the US Supreme Court decision on same-sex marriage.