What if there was a way to invest pension fund dollars by capturing niche and innovative investments apart from well-known ideas like the stock market? It turns out, your TRS investment management team has been doing this for more than a decade and is adding value every day. This special portion of your pension fund is called Absolute Return.
Absolute Return (AR) is defined as a broad investment category that includes all assets that have a high probability of generating a positive absolute return regardless of market conditions over a one- to three-year period. In short, AR's role in your pension trust fund is anchored on choosing to seize appropriate investment opportunities that might otherwise be missed.
“There really are very few if any (pension fund) peers that have a team that is specially designed to look across broad, multi-asset classes with no set target to invest," said Ashley Baum, who heads the Investment Management Division's 11-year-old Special Opportunities team. Baum's group of eight TRS investment professionals manages most of the assets inside the AR sleeve of your fund. Baum told TRS trustees in May during her annual review of the Absolute Return portfolio the two main factors she considers are choice and time.
“What's unique about this area is that we're focused on a three-year view (as opposed to eying results every few months)," Baum said. “And we think this gives TRS the opportunity to the “strong hands" in the (investment) market.... We're very proud of it."
By the Numbers
As of last December, AR represented 3.4% of the total pension fund value. Since the program began, it's placed more than $16 billion and returned an impressive 16.2%. It's another way your pension fund is ensuring your future retirement will be secure.