The long-term rates-of-return for the TRS investment portfolio continue to beat expectations. The 30-year return was 8.4 percent, net of fees, for the fiscal year that ended on June 30. The 40-year return was 9.2 percent. These returns beat the System’s assumed long-term rate of return of 7 percent.
The TRS portfolio now totals $51.5 billion, a 4.25 percent increase over the $49.4 billion in assets recorded during fiscal year 2017. TRS assets have increased by 80.7 percent over the last decade.
This good news refutes a recently-published story in Crain’s Chicago Business which implied that the TRS portfolio carries a high degree of “risk” that “poses a threat” to member pensions. That is incorrect.
The truth is the portfolio’s risk profile is the same as a generic portfolio comprised of 60 percent stocks and 40 percent bonds. The amount of risk carried by the TRS portfolio is monitored closely by the Board of Trustees and investment staff and is lower than comparable public pension systems.
TRS maintains a highly-diversified portfolio – a mix of stocks, bonds, real estate, private equity – as well as investments designed to protect the portfolio in the event that there is a future downturn in the economy.