SEPTEMBER 23, 2014

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Texas Teachers ups real assets allocation by 3%

by Reg Clodfelter

The $130.2 billion Teacher Retirement System of Texas has decided to increase its target to real assets, which includes real estate, infrastructure, timber and energy, from 13 percent to 16 percent (with a lower bound of 11 percent and an upper bound of 21 percent), creating room for nearly $4 billion of additional investment in the coming years. 

Board documents cite strong supply and demand fundamentals in the real estate market, specifically the shortage of new supply, as reasons the market is currently strong.

Currently, Texas TRS’ real assets portfolio is valued at $15.1 billion, or 11.7 percent of the total portfolio, putting the portfolio approximately $5.6 billion shy of its target, which the retirement system expects to meet by 2020 by making average net contributions of $1.3 billion per year. In the meantime, Texas TRS expects the underweight portion of its real assets portfolio to be offset by allocations to public equities and bonds.

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