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TRS says investments have rebounded

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Illinois

In the wake of the economy-crippling COVID-19 pandemic, Teachers’ Retirement System assets experienced a $4.9 billion rebound between March and July, climbing to a total of $53.4 billion.

The worldwide effect of the coronavirus impacted TRS investments between January and the end of fiscal year 2020 (FY2020) on June 30. The preliminary TRS investment return for FY2020 hovered close to the break-even mark at +0.52 percent, net of fees, on June 30. By comparison, on December 31, 2019, the half-way mark in FY2020, the TRS rate of return was +13.41 percent.

The System began calendar year 2020 with $54.2 billion in assets. The effects of the pandemic caused total assets to drop to $48.5 billion at the end of March. On June 30, assets totaled $51.6 billion. At the end of July, TRS assets totaled $53.4 billion, a 10.1 percent increase since March.

“Everyone took a hit during the pandemic,” said TRS Interim Executive Director Stan Rupnik. “But the investment strategies we have in place limited losses and have allowed us to prudently rebuild the portfolio’s value.”

During the January-March quarter of FY2020, the TRS investment return was -9.95 percent, net of fees. During the previous quarter, October to December, the System’s return was +4.28 percent. The System’s return during the April to June quarter was +5.94 percent.

The TRS return between January and March, however, stood favorably compared to other economic measurements of the same period.

The Northern Trust Corporation’s analysis of the 300 largest U.S. institutional investors indicated that the median return for public pension plans between January and March was -12.6 percent. A similar analysis of public pension systems by Wilshire Associates found that the median quarterly return was -12.8 percent.

In general, the negative investment returns for various stock market measurements indicate that the TRS portfolio held up comparatively well. For instance, the Standard & Poor’s 500 index returned -19.6 percent during the January–March quarter.

Long-term, TRS investment returns continue to exceed the System’s long-term assumed return rate of 7 percent. For FY2020, the 40-year TRS return was +9.0 percent.

“The long-term investment returns are the most important numbers for our members,” Rupnik said. “These timeframes reflect the long-term relationship that TRS has with its members, both as active educators and as retirees. The long-term returns also indicate a successful investment program that values steady growth and strong risk management over several generations.”

posted by Rich Miller
Wednesday, Sep 9, 20 @ 10:19 am

Comments

Richard Ingram on line 1.

Comment by Right Field Wednesday, Sep 9, 20 @ 10:24 am
TRS thanks Jeff Bezos.

Comment by City Zen Wednesday, Sep 9, 20 @ 10:26 am
It’s tough to sustain a 7% return when the economy is only growing by 3% a year.

Comment by Downstate Wednesday, Sep 9, 20 @ 10:28 am
Good news for the funds is good news for everyone.

Comment by A Wednesday, Sep 9, 20 @ 10:34 am
TRS received a 5.94% return between April and June.

The S&P500 returned 25.5% in the same time period.

TRS missed out on a 19.5% return by not indexing its assets. Why do they pay “experts” tons of fees when they can just take what the market returns?

Comment by John Bogle Wednesday, Sep 9, 20 @ 10:35 am
“TRS missed out on a 19.5% return by not indexing its assets”

Their portfolio allocation is not 100% equities in the S&P nor should it be. Are you equally upset that Q1 returns were down 9.95% and not 20.7%?

Comment by 1st Ward Wednesday, Sep 9, 20 @ 10:50 am
Point of comparison: Illinois Municipal Retirement Fund (IMRF) reported in their Summer 2020 ewsletter that about $44.8 year-end 2019 portfolio was down 14.0% in Q1 2020, with much of the loss since regained, and the portfolio now at $42.3 billion. Still, losing $2.5 billion in value is a big loss. IMRF does not receive money to pay pensions from the State, but only an operating budget.

Comment by revvedup Wednesday, Sep 9, 20 @ 11:00 am
Their portfolio allocation is not 100% equities in the S&P nor should it be.

Exactly so. They need cash to pay monthly benefits.

They need short term investments to pay next year’s benefits

etc to the equity to get that longer term grown and inflation protection.

It’s not easy at all, especially in these low interest rate times.

Comment by Fav Human Wednesday, Sep 9, 20 @ 11:04 am
“It’s to maintain a 7% return when the economy is only growing at 3%”

It does seem odd. It may depend more on who is doing the performance reporting than the economy would seem to indicate.

Comment by Back to the Future Wednesday, Sep 9, 20 @ 2:13 pm
Admittedly we personally have somewhat aggressive investments, but we’ve experienced -0.5% to +29% returns YTD depending on the investment. Not surprised by the pension funds bouncing back.

Comment by RNUG Wednesday, Sep 9, 20 @ 4:09 pm
So the previous Executive Director and his CIO are no longer there. Not sure why they were let go. Is there any concern about the accuracy of what is being reported?

Comment by IT Guy Wednesday, Sep 9, 20 @ 8:00 pm