TRS Investments Rebound

In the wake of the economy-crippling COVID-19 pandemic, Teachers’ Retirement System assets experienced a $4.9 billion rebound between March and July, climbing to a total of $53.4 billion.            

The worldwide effect of the coronavirus impacted TRS investments between January and the end of fiscal year 2020 (FY2020) on June 30. The preliminary TRS investment return for FY2020 hovered close to the break-even mark at +0.52 percent, net of fees, on June 30. By comparison, on December 31, 2019, the half-way mark in FY2020, the TRS rate of return was +13.41 percent.

The System began calendar year 2020 with $54.2 billion in assets. The effects of the pandemic caused total assets to drop to $48.5 billion at the end of March. On June 30, assets totaled $51.6 billion. At the end of July, TRS assets totaled $53.4 billion, a 10.1 percent increase since March.

“Everyone took a hit during the pandemic,” said TRS Interim Executive Director Stan Rupnik. “But the investment strategies we have in place limited losses and have allowed us to prudently rebuild the portfolio’s value.”

During the January-March quarter of FY2020, the TRS investment return was -9.95 percent, net of fees. During the previous quarter, October to December, the System’s return was +4.28 percent. The System’s return during the April to June quarter was +5.94 percent.

The TRS return between January and March, however, stood favorably compared to other economic measurements of the same period.

The Northern Trust Corporation’s analysis of the 300 largest U.S. institutional investors indicated that the median return for public pension plans between January and March was -12.6 percent. A similar analysis of public pension systems by Wilshire Associates found that the median quarterly return was -12.8 percent.

In general, the negative investment returns for various stock market measurements indicate that the TRS portfolio held up comparatively well. For instance, the Standard & Poor’s 500 index returned -19.6 percent during the January–March quarter.

Long-term, TRS investment returns continue to exceed the System’s long-term assumed return rate of 7 percent. For FY2020, the 40-year TRS return was +9.0 percent.

“The long-term investment returns are the most important numbers for our members,” Rupnik said. “These timeframes reflect the long-term relationship that TRS has with its members, both as active educators and as retirees. The long-term returns also indicate a successful investment program that values steady growth and strong risk management over several generations.”

TRS investments have recorded positive returns throughout the decade following the 2008-2009 worldwide financial crisis. All returns in this chart are net of fees: