How is Georgetown's Employee Retirement Fund Doing?

The short answer is: "The trend is in the wrong direction". Here is the data from the most recent reporting period showing the net performance of the Texas Municipal Retirement Fund using 5 year rolling returns.

Click chart to enlarge

The chart shows that the total net return over the last 5 years is 5.4% versus a benchmark or projected return of 6.75% annually.

In addition, the long term trend is down.

The TMRS board needs to lower their assumed rate of return to more closely match actual performance. Recall that the lower the assumed return, the more the fund is under-funded. To insure the fund is adequately funded will required greater contributions by the employees, the City, or both.

There is another risk that portfolio managers have not recognized, but is now becoming public. “They can no longer get their money out,” said the investor, a builder of global institutional portfolios.

“Allocators who made private equity investments in mainland China over the past 5-10yrs are now trapped,” he continued. “Not metaphorically trapped - they’re literally not permitted to move cash proceeds out of China as those investments are sold. The problem is widespread and the sums so large that we now have internal people focused on helping these allocators hedge the exchange rate risk.”

There is another risk with respect to China in that China is selling Chinese company stock into the US stock market where institutional investors, such as pension funds, purchase the stock. The Chinese use these funds to attack America economically.

There is budding recognition of this fact and at sometime in the future, the Federal Government may prohibit American investment in Chinese companies.

This would have a significant negative effect on the value of the TMRS fund value, for example.

It is unclear at this time what the percentage of TMRS's investments are in Chinese companies, but it is definitely greater than zero.