Bloomberg News

Texas Teacher Pension-Fund Investments Lost 7% in Third Quarter

December 09, 2011

Dec. 8 (Bloomberg) -- The 1.3 million-member Texas Teacher Retirement System lost 7 percent on investments in the third quarter, a consultant to the plan said, citing an underweight position in U.S. Treasury securities.

Including payouts and contributions, assets fell 8 percent to about $101.1 billion on Sept. 30 from $109.9 billion on July 1, figures from Hewitt EnnisKnupp, the consultant, show in a report presented today to the fund’s board members in Austin.

“We had a terrible third quarter, but the trust is up 3.6 percent over the past year,” said Britt Harris, the fund’s chief investment officer, during a meeting in which the figures were reviewed. Investments earned 3.6 percent for the 12 months through September and 4.6 percent for the past three years.

Compared with more than 70 percent of U.S. public pensions, the Texas plan had better one-year returns, Harris said. “If we are getting all Ds, everybody else is getting Fs.”

By comparison, the Standard & Poor’s 500 lost about 14 percent in the third quarter, while Treasuries rose 6.4 percent, according to a Bank of America Merrill Lynch index.

The fund hasn’t reduced a $700 million investment in gold because it hasn’t seen a “bubble signal” in bullion prices, Harris said. The plan’s stake in the precious metal has jumped more than 40 percent in value in two years, he said.

The retirement system has reorganized its fund during the past three years to expand holdings in private equity, emerging markets, commodities and real estate while reducing its fixed- income assets, Harris said. The strategy is designed to protect the fund in a more inflationary environment, while most plans aren’t sufficiently diversified, he said.

--Editors: Ted Bunker, Mark Tannenbaum.

To contact the reporter on this story: David Mildenberg in Austin at dmildenberg@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.


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