TEXPERS Pursues Diversification in Asset Allocations, Investments
The Texas Public Employee Retirement Systems (TEXPERS) has released a report on the results of the strategies its local systems have followed for allocation and investment of assets.
“Report on the Asset Allocation and Investment Performance of Texas Public Employee Retirement Systems
,” released at TEXPERS’ 28th Annual Conference in Austin, says that local systems which invested in U.S. assets outperformed over the last decade, while those that invested in global equities and bonds outperformed during a 20-year period. Maples Fund Services studied 59 Texas systems, which collectively managed almost $50 billion in total assets in 2016.
According to the report, the funds made their investments in four kinds of assets in remarkably even proportions:
- alternative strategy investments — private equity, real estate, and marketable alternative assets — 26.8% of the funds’ assets;
- U.S. domestic equities, 26.6%;
- fixed income assets, 22.5%; and
- international equities, 21.8%.
The report says that most systems have lowered their rate of return assumptions, which now average 7.6%. This reflects pension boards’ desire for conservative investing approaches, the report says, whereas higher targets can draw fire for increasing investment risks or masking higher unfunded liabilities.
While there was good news about how investments performed, there were some sobering statistics as well. The report says that just over one quarter of the systems studied did not receive the full actuarial required contribution from their city sponsor in 2016 a factor — which could portend higher unfunded liabilities in the future.