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TRS Investments Rebound from COVID-19 Effect; $3 Billion in Growth between March and June

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SPRINGFIELD, IL – In the wake of the economy-crippling COVID-19 pandemic, Teachers’ Retirement System assets experienced a $3 billion rebound during the March-to-June quarter of fisal year 2020, climbing to a total of $51.6 billion.

Nonetheless, the worldwide effect of the coronavirus impacted TRS investments between January and the end of fiscal year 2020 on June 30. The preliminary TRS investment return for FY 2020 hovered close to the break-even mark at +0.50 percent, net of fees, on June 30. By comparison, on December 31, 2019, the half-way mark in FY 2020, 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, a +6.4 percent increase.

“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 FY 2020, 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. The Standard & Poor’s 500 index returned -19.6 percent during the quarter.

Long-term, TRS investment returns continue to exceed the System’s long-term assumed return rate of 7 percent. For FY 2020, 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.”

TRS investments have recorded positive returns throughout the decade following the 2008-2009 worldwide financial crisis. All returns in this chart are net of fees:

Fiscal Year  TRS Return
2020 + 0.50% (preliminary)
2019  + 5.2%
2018              + 8.5%
2017   + 12.6%
2016 + 0.01%
2015 + 4.0%
2014 + 17.4%
2013 + 12.8%
2012 + 0.8
2011  + 23.6%
2010  + 12.8%

During the Board of Trustees’ regularly scheduled August meeting, the following actions were taken:

  • The Board approved annual tactical investment plans for the Private Equity, Real Assets and Diversifying Strategies portfolios.
  • The Board approved the issuance of a formal “Request for Proposals” to engage an executive search firm to assist the System in selecting a new executive director. Former Executive Director Richard W. Ingram resigned in July.
  • The issuance of an RFP to find a company that could provide TRS with Customer Relationship Management software. A CRM system would help the Investment Department develop and manage new, existing and potential business relationships and investment partnerships.
  • Within the $14.4 billion Global Income Portfolio:
    •  The commitment of $50 million to TerraCotta Group, of El Segundo, California, through the System’s Emerging Manager Program. This is a new relationship for TRS.
    • An additional commitment of $75 million to Apollo Global Management, of New York, New York. Apollo currently administers $527.5 million in TRS assets.
    • An additional commitment of $25 million to Taurus Funds Management, of Sydney, Australia. Taurus currently administers $106.4 million in TRS assets.
  • Within the System’s $6.1 billion Private Equity Portfolio:
    • The commitment of up to $50 million to Stellex Capital Management, of New York, New York, through the System’s Emerging Manager Program. This is a new relationship for TRS.
  • Within the $5.55 billion Diversifying Strategies Portfolio:
    • The full redemption of $58 million from the Global Risk Premium Tactical Master Account managed by AQR Capital Management of Greenwich, Connecticut. AQR continues to manage $1.4 billion in TRS assets.
  • Within the $8.1 billion Real Assets Portfolio:
    • The commitment of up to $200 million to Macquarie Infrastructure Partners, of New York, New York. Macquarie currently administers $48.1 million in TRS assets.
    • The commitment of up to $250 million to Stonepeak Infrastructure Partners, of New York, New York. This is a new relationship for TRS.
  • Within the System’s $17 billion Public Equity Portfolio:
    • The termination of a $481 million domestic large capitalization strategy managed by AQR Capital Management of Greenwich, Connecticut. AQR continues to administer $1.4 billion in TRS assets.
    • The termination of a $60 million emerging markets large capitalization strategy managed by Northern Trust Global Investments of Chicago. Northern Trust continues to manage $2.4 billion in TRS assets.

About Teachers’ Retirement System

The Teachers’ Retirement System of the State of Illinois is the 37th largest pension system in the United States, and provides retirement, disability and survivor benefits to teachers, administrators and other public school personnel employed outside of Chicago. The System serves 434,313 members and had assets of $51.6 billion as of June 30, 2020.

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