Texas Teachers’ Planning for Next CIO | Chief Investment Officer

The board at the Teacher Retirement System of Texas is planning to discuss leadership succession possibilities at its December 12 meeting after news broke that current Chief Investment Officer Jerry Albright will take on a new role, according to sources reported by Bloomberg.

Albright has been with the $156 billion pension since 1992, assuming the CIO role in 2016 after Britt Harris unexpectedly resigned to serve as CIO at the University of Texas Investment Management Company (UTIMCO) after working at the TRS for 12 years.

Specifically, the board will discuss the continuation of the succession plan that launched in 2016 after Harris’ departure, but did not cease after Albright’s appointment. “Since then, trustees have continued to discuss CIO succession with IMD executive staff,” a spokesperson for the retirement system said. “TRS is unable to provide further details on exact timing of potential changes to the IMD succession plan since those details are subject to board deliberation and decision.”

The spokesperson added that the conversation on December 12 regarding the succession plan will be “open-ended” regarding its format.

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During his tenure, Albright placed an emphasis on alternative investments and lowering the pension’s overall beta. The new strategic asset allocation he helped put in place earlier this year shaves three percentage points off the pension’s allocation to global equity markets, dropping from 57% to 54%. The intent was to provide the plan with a new degree of insulation from equity risk.

The TRS also increased its allocation to alternative asset classes in the September allocation, with private equity, infrastructure, natural resources, and energy getting a 1% bump in their overall targets.

The pension returned 6.4% for the 12 months ending June 30, 2019, slightly missing its 6.7% benchmark. Many pensions missed their benchmarks due to the fourth-quarter drag in 2018.

Aside from alternative investments and growing his investment team, Albright also sought to expand the system’s presence in international markets, and discussed with CIO the possibility of opening a Singapore office to get closer to the action in Asia.

The focus would initially be on public markets investments, and then private markets to subsequently build its relationship in the region. “The Asian market is a big world …. so it’s a big span of space over there we’re looking to cover,” Albright told CIO. “It is 16 hours away from Texas if you’re trading, and we actually trade a lot of public equities out of that market, and so it’s important for us to be there.”