TCDRS outlines revised investment policy for 2021

The Austin-based pension plan outlines a revised policy for its investment portfolio.

Institution: Texas County and District Retirement System
Headquarters: Austin, US
AUM: $38.1 billion
Allocation to alternatives: 49.2%

Texas County and District Retirement System has adopted a revision to its existing investment policy following the pension’s June board meeting.

Highlights from the revised investment policy include:

  • The targeted split for exposure to value-add and opportunistic real estate is 20:80. The target ranges are 0-30 percent for value-add vehicles and 60-100 percent for opportunistic funds.
  • Despite primarily investing in private real estate via limited partnerships, TCDRS remains open to allocating to the asset class via a broad multitude of real estate investment types, such as co-investments.
  • To reduce the risk of over-investing in any given property type and negatively impacting the pension’s long-term returns, TCDRS will diversify its investments by asset class and geographic locations.
  • TCDRS will not compromise its real estate portfolio by providing more than 30 percent of any given vehicle’s raised capital. The pension will also not allow its investment in any given vehicle to exceed 10 percent of the value of its wider real estate portfolio.
  • The pension’s real estate investment performance will be measured by the achieved internal rate of return. TCDRS’s private real estate portfolio uses the Cambridge Associates Real Estate Index as a benchmark.

This revision to the policy was recommended to the board by chief investment officer Casey Wolf following concerns over the requirements for co-investments and following the clarification of benchmark calculations. Wolf took the reins as CIO in April 2018, having previously been managing director for TCDRS’s hedge fund and opportunistic credit portfolios.

TCDRS has a 6 percent target allocation to private real estate that currently stands at 3.2 percent. In June, the $38.1 billion pension approved a commitment of €65 million to Victory European Real Estate Fund II (A) SCSp and $125 million each to FCP Realty Fund V and Carlyle Realty Fund IX. These commitments bring the pension’s total number of real estate commitments for 2021 up to seven.

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