A billion here, a billion there… . the Teacher Retirement System’s assets have decreased by $7.2 billion in a little more than two months — a big chunk of change, but only a 6 percent drop in the value of the portfolio.
It’s no surprise given the recent decline in global equity markets, and it does not mean much if anything for the long term health of the fund. Still, the number is a grabber.
The pension fund’s assets stand at $107.5 billion today compared with $114.7 billion on Nov. 30, according to materials presented to the TRS board of trustees today.
The system didn’t break down January’s investment performance, but a look at the final four months of 2007 shows where the money went.
For September through December, fixed income was down $3.6 billion, the equities portfolio decreased by $8.6 billion, but alternative investments increased by $3.3 billion. Alternatives is a big catch-all category that includes hedge funds, buyout funds, venture capital and real estate.
Statesman
Texas teachers aim to profit from mortgage credit meltdownThe Teacher Retirement System of Texas has committed to invest $475 million in the new Pimco Distressed Mortgage Fund LP. The Pimco fund is estimated to be $2 billion, meaning the Texas teacher fund has a hefty 24% stake.
The teacher fund has already invested $142.5 million of the total it committed to the Pimco fund, which intends to invest in distressed mortgage and real estate-related debt. The bet is that prices of these instruments have fallen so much that there is big money to be made, even if mortgage defaults continue to roll on.
In materials presented to the Fresno County (Calif.) retirement system last fall, Pimco said it expects to earn 15% to 20% annual returns. Public pension and investment returns in New Jersey, Oklahoma and California are also investing.
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Speed is a different issue. Last year, the teacher fund’s board of trustees gave its investment staff, led by Chief Investment Officer Britt Harris, the authority to make large investments without approval of the board or its private markets committee. The idea was to allow Harris to move quickly when the fund hit upon promising investment ideas.
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