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Newsmakers

Texas Teachers Fund Reports Record Full-Year Return

The gain takes the fund's market value to $96.7 billion, erasing most of the losses suffered during the financial crisis.

(June 21, 2010) — The Texas Teacher Retirement System (TRS) had a record investment gain of 35% — or $25 billion — for the year ended March 31, breaking its previous record of 32% in 1998.  

The Austin-based fund ended the first quarter with a value of $96.7 billion over the previous 12 months, erasing most of the decline produced during the severe financial downturn. TRS’ full-year return represents the biggest ever achieved by the fund, Jerry Albright, TRS’s senior managing director of its investment division, told ai5000.

“We’ve benefited from being in the right asset at the right time, leveraging strategic investments, such dislocated credit, to take advantage of credit opportunities,” Albight said.

During the period, global equity markets rallied strongly after bottoming in March 2009, with the fund’s global equity portfolio advancing by more than 53%. Overall, the fund outperformed general market returns by approximately 2.5%, or about $2 billion.

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“The period just prior to the recent gains tested the resolve of the TRS investment team, our board and that of our members,” stated TRS Chief Investment Officer Britt Harris, who reported the verified figures to trustees at their June 17-18 board meeting. “While the recent gains are very encouraging, we all know that this entire period has been exceptionally volatile and virtually unprecedented. While the fund has performed well, we still have much work to do.” Harris added that even though TRS has made up for the losses suffered during the financial downturn, it must continue meeting long-term obligations to its every member through cooperation, patience and persistence.

According to a statement on its web site, the fund additionally hired executive recruitment firm Korn/Ferry International, selected at the fund’s board meeting, to assist with the search for a new executive director. The new executive director will replace Ronnie Jung, who announced in April that he will leave in July 2011. The board expects to complete the search before the end of the year.

TRS manages the $96.7 billion trust fund established to finance member benefits. Nearly 1.3 million public education and higher education employees and retirees participate in the system.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742
Home > News > Regulation > New York Pension Is Mulling a Lawsuit Against BP
Regulation

New York Pension Is Mulling a Lawsuit Against BP

The state's $132.6 billion fund holds 17.5 million shares of BP, which yesterday closed at $31.71 a share -- down from $60.48 the day of the disaster.

(June 18, 2010) — The $132.6 billion New York State Common Retirement Fund is considering suing BP for its management of the well in the massive Gulf of Mexico oil spill.

The fund, one of the largest pensions in the country, owns 17.5 million BP shares through index funds. The potential suit reflects heightened pressure against the beleaguered British oil giant since the April 20 explosion aboard a rig that killed 11 workers, spewing out thousands of barrels of oil a day.

Since the explosion at its Macondo oil well, BP’s stock on both sides of the Atlantic, largely held by pension funds, has dropped by nearly half.

Already, BP has spent about $1.8 billion in the spill response, with the cleanup tab expected to hit $20 billion, assuming worst-case spill estimates. The firm faces billions more in costs related to plugging the leak, clean-up, fines and potential litigation — if found “negligent” under federal law, BP’s fines could quadruple to $4,300 per barrel spilled, adding perhaps $20 billion to the bill, the AP reported.

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On Wednesday, President Obama sat down with BP officials and agreed to a $20 billion fund for claims that would be funded by BP, but run by the government. The intense political pressure from the US led BP to suspend its quarterly dividend payments.

“BP’s package agreed with President Obama should cool the political heat and provide some degree of comfort to equity and bond markets, shareholders and businesses/residents in (the Gulf of Mexico) affected by the Deepwater Horizon accident,” analysts at Evolution Securities said in a research note Thursday.

Nationwide, other pensions have faced similar hits over the BP disaster. This week, the Florida’s pension fund, the fourth-largest in the nation, noted the value of its BP investments had plunged more than $67 million since the April 20 explosion. On the other hand, New Jersey’s pension system avoided the hit from BP’s stock drop as state portfolio managers made a fortuitous decision to sell off most of the state’s $465 million position in BP shares in January, months before the explosion.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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