NEWS

Poorly Funded Teachers’ Retirement System of the State of Illinois Reports Strong Quarter

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.