By David G. Barry
For the first time since
2009, the Teachers’ Retirement System of the State of Illinois (TRS) has
posted a fiscal year loss.
The $62.7 billion system said it had a negative 1.17% return for the year ended
June 30, a result it called “favorable” compared to similar public pension
plans. According to a study by Wilshire Trust Comparison Services, the medium
return rate of large public pension plans was negative 7.25%.
Over the past 13 years, the closest TRS came to reporting a loss was in 2016
when it had a gain of 0.01%. In fiscal year 2009, TRS reported a return of
negative 22.7%.
The loss follows a 25.5% net return for the fiscal year ended 2021, which sent
the system to a record $63.9 billion in assets. The results also enabled the
system to decrease its unfunded liability as of December 31 to $79.9 billion
and increase its funded ratio to 42.5% from 40.5%.
TRS said it will pay more than $7 billion in benefits in 2022 to more than
128,000 members and their families.
In a statement, Stan Rupnik, TRS’ executive director and chief
investment officer, said that “due to the under-funded status of TRS, the
system’s primary objective is to protect member assets against large market
drawdowns caused by economic volatility.”
As a result, the system, he said, “believes the most prudent strategy is a
diversified portfolio that seeks to participate in the upside of the market but
also positioned to better protect assets in times of high market volatility.”
At the end of the fiscal year, it had 32.6% of the portfolio in domestic and
international stock markets, 24.3% in bonds and short-term assets, 19.7% in
real estate and other tangible assets, 16.2% in private equity and 7.2% in
hedge funds and other diversifying strategies.
“The TRS conservative strategy performed as intended,” Rupnik said. “As
significant market volatility, rising inflation and interest rate increases hit
in early calendar year 2022, the TRS portfolio performed very well.”
