Surprise on the upside for TRS’ strategic parternships

The trend towards the use of strategic partnerships by large US public pension funds is paying off, with the Teacher Retirement System of Texas claiming its program of a committed $4 billion produced returns of 7.3 per cent for the year to the end of September, well above expectation.

The $91 billion fund decided to enter into strategic relationships with four firms, JP Morgan, Morgan Stanley, BlackRock and Neuberger Berbman, in April 2008, with the intent the fund would benefit from their expertise in investments, research, strategic planning, risk management, global access to public and private markets and trading.

Chief investment officer Britt Harris, said the performance of the strategic partners was not only beneficial in terms of returns where it was performing better than expected, but in the proprietary research projects that have been completed in collaboration with the partners.

“The bottom line is these partnerships are enabling us to make the best possible investment decisions,” he said.

In other investment news, the TRS recently appointed LaSalle Investment Management as a fiduciary advisor to the investment management division with respect to the private markets portfolio, including certain co-investment opportunities in the real asset portfolio.

At the end of August TRS had about $5.5 billion in REITs, real estate and other real assets. Public equities remains the largest allocation with $47 billion invested.

The fund retains Ennis Knupp as its general investment consultant, and also employs Hamilton Lane for domestic private equity, Altius Associates for international private equity, Albourne for absolute return and The Townsend Group for real estate consulting.