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In what was referred to by board members as an “historic” meeting, the TRS Board of Trustees approved four major financial firms as strategic partners of the retirement system. TRS has relied on its internal investment staff to manage the fund’s investment portfolio, but the Legislature approved the use of external managers for up to 30% of the fund’s assets during the 2007 legislative session.
TRS chief investment officer Britt Harris subsequently introduced the strategic partnership concept, which he had utilized during his employment in the private sector. Essentially, in addition to making investments with a portion of TRS funds (each firm will receive $1 billion, less than 1% of the overall value of the fund), the partners are agreeing to a reciprocal relationship that will give TRS access to additional investment data and tools.
The chief executive officers of all four major firms – Black Rock Financial Management, JP Morgan Asset Management, Lehman Brothers Asset Management, and Morgan Stanley Investment Management – were in attendance at the meeting (prompting additional security at the TRS office building). The CEOs expressed enthusiasm for the strategic partnership concept (which is considered groundbreaking for a public pension, though it has been used in the private sector) and took the opportunity to provide the board and audience with their thoughts about the current U.S. economic crisis, global investment opportunities, and presidential election politics.
The board rejected a staff recommendation that would have allowed the allocation of billions of additional dollars to those companies, and removed that proposal from the motion before approving the partnership arrangements.
In other business, the board discussed a proposal to hire a firm to consult with TRS staff about the agency’s communications needs, a topic likely prompted by a tumultuous year involving major changes in the pension fund’s investment strategies and accompanying media attention. New board member Charlotte Clifton, TCTA’s immediate past state president, commented on the need for better communications between TRS and school employees/retirees. TRS is moving forward with the plan to use a consulting firm to assess its current communications and make recommendations for improvements.
Web posted: 04/11/08
