Making and Managing Investments
Efficiently
Effectively
Performance
The TRS board of trustees targets an annual, average long-term return of 7.0%. It is based on a policy asset mix comprising an allocation of 57% to global equity markets, 21% to real return, 21% to stable value and 5% to risk parity. The allocation sums to 104% and therefore has leverage at the asset allocation level. Our asset allocation is expected to provide downside protection to the portfolio under different economic conditions. Investment performance is calculated using a daily time-weighted rate of return. Returns are calculated independently by the Fund's custodian bank, using annualized returns for periods greater than one year.
How are TRS investment decisions made?
In general, the Internal Investment Committee (IIC) approves most investments in external managers. The permanent IIC membership consists of the Executive Director of TRS, the Chief Investment Officer, the Chief Risk Officer, and the Investment Management Division Senior Managing Directors. Some investments are presented to the board of trustees as required by the board's Investment Policy Statement (pdf).
Why does TRS engage external managers?
The Investment Management Division engages the expertise and experience of external managers to provide superior risk-adjusted returns. The three types of external managers and their benefits to TRS are:
Investment Managers offer:
- Higher tracking error strategies focused on generating alpha which complement internal portfolios
Hedge Fund Managers offer:
- Stable value hedge funds which function as a fixed income substitute
- Focus on protecting assets in down markets
Absolute Return Managers offer:
- Tactical exposure during valuation extremes