Is the City Watching Its Pension Fund?

The most recent report from the Texas Municipal Retirement System indicates the fund paid out $631,354,701 more than they earned and took in from participants for the year through September 30, 2015.

As previously reported, TMRS is also planning on investing in Private Equity investments as a means for "juicing" returns. Of course this increases the risk of losing money!

It is now reported(Link) that Private Equity has heavily invested in energy companies, Opps! They have also invested in shipping, based on the assumption that the World economy is recovering, especially China. Another Opps!

Conditions are so lousy that major players, including public companies, are selling ships at distressed prices to raise cash. Monarch Alternative Capital and Oak Tree Capital have large stakes in two of the public companies that are under duress. And given that these deals were levered, you can expect the related debt, which probably at least in part wound up in private equity credit funds, will also show losses.

Mind you, these tanker losses are chump change in term of the total capital deployed by the private equity industry. But the fact that the funds invested on a continued basis, as opposed to a brief fling at bottom-fishing, strongly points to underestimation of the risks (as in a naive belief that they could rise a rising market and get out in time) or sheer cynicism (private equity makes money whether the deals work out or not). And more broadly, as the peak multiples paid in 2015 attest, it also shows too much money chasing too few deals can lead to a remarkable ability to rationalize questionable investments.

This is clearly not the time for TMRS to be investing Georgetown employees pension funds in risky Private Equity ventures.

Is the city watching their employee investments and communicating with TMRS to not invest with risky Private Equity? Inquiring minds would like to know!