By David G. Barry
The Teachers’ Retirement System of the State of Illinois
(TRS), which has the highest unfunded pension liability of any of the six
state pension funds, has – so far – had a strong 2022 in terms of returns and
investments.
The Springfield, Ill. system, which in 2021 was just 42% funded, said that as of March 31 – the end of its third quarter – it had assets of $66.1 billion, a slight increase over the $66.02 billion that it had as of December 31. In contrast, the majority of institutional investors reported a loss for the quarter - the result of downturns in both the equity and bond markets. The Standard & Poor’s 500 Index, for example, reported a negative 4.6% for that same period
TRS contributed the results to its “diversified risk-aware investment
strategy.” As of December 31, it had 51.9% of its portfolio in equities, which
includes both public and private equities; 24% in income composite, which
consists of short duration, beta plus, inflation-linked securities, non-dollar/EMD,
floating rate and private debt; 16.2% in real assets, which includes real
estate and infrastructure, and 7.9% in diversifying strategies, which are
essentially hedge funds.
The system began its fiscal year with $63.9 billion in assets and has realized
a positive 4.2% return for the first nine months.
In a statement, Stan Rupnik, the system’s executive director and chief
investment officer, said that “long before economic pressures began to build,
TRS took steps to lessen the effects of any unpredictability in the markets. So
far, that strategy has been successful.”
Showing its confidence in that strategy, TRS committed more than $5 billion to
investment managers between February and May.
Of that $5 billion, more than $1 billion went to managers in its $10.4 billion
private equity portfolio.
The commitments included:
Up to $125 million to Advent International Corp., which currently
manages $230 million in TRS assets.
$150 million to Arlington Capital Partners, which currently manages $90
million in TRS assets.
$200 million to EQT Fund Management, which currently
manages $200 million and 410 million euros in TRS assets.
$100 million to Francisco Partners, of San Francisco,
Calif. Francisco is a new investment relationship for TRS.
75 million euros (US$78 million) to Providence Strategic Growth Capital
Partners, which currently manages $75 million in TRS assets.
$200 million to RCP Associates, which currently
administers $750 million in TRS assets.
The commitment of $125 million to SK Capital Partners,
which currently administers $120 million in TRS assets.
The commitment of $200 million to Veritas Capital Fund
Management, which currently administers $550 million in TRS assets.
An additional commitment of $14 million to Grain
Management, which currently administers $119 million in TRS assets.
TRS also gave the nod to two managers in its $11.9 billion real assets
portfolio. It committed up to $300 million to Blackstone Inc., which now
administers $776.3 million of assets for the system, and up to $100 million to Gateway
Capital, which currently administers $50 million in TRS assets.
Within, its $16.3 billion Global Income Portfolio, TRS
committed:
$100 million to Pharmakon Advisors, a new investment
relationship.
$150 million to Cerberus Capital Management, which currently
manages $419.6 million for the system.
$75 million to Dignari Capital Partners, which currently
administers $22.7 million in TRS assets.
$100 million to Edelweiss Alternative Asset Advisors,
which currently administers $71 million.
$25 million to L2 Point Capital, a new investment
relationship.
$350 to $400 million to Payden & Rygel.
$250 million to Apollo Global Management, which currently
administers $850.8 million.
$150 million to Beach Point Capital Management, which
currently administers $434.2 million in TRS assets.
$200 million to Hayfin Capital Management, which currently
administers $268.9 million in TRS assets.
$225 million to Intermediate Capital Group, which currently
administers $440.3 million in TRS assets.
An additional commitment of $225 million to Pacific
Investment Management Company, of Newport Beach. PIMCO currently
administers $2.2 billion in TRS assets.
Within its $4.9 billion, diversifying strategies portfolio,
TRS also took the full redemption of $250 million from Light Sky Macro.
Within its $22.5 billion Public Equity Portfolio, TRS
committed:
$400 million to Causeway Capital Management, a new
investment relationship.
$400 million to J.P. Morgan Investment Management, which
currently administers $840 million in TRS assets.
$400 million to T. Rowe Price Associates, a renewed investment
relationship.
$400 million to William Blair Investment Management, a
new investment relationship.
TRS also terminated the Domestic Large Capitalization Value Strategy of LSV
Asset Management, which continues to administer $1.5 billion in TRS assets,
and two passive growth strategies administered by RhumbLine Advisors,
which continues to administer $9.9 billion in TRS assets.
