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Private Assets

Private equity
Private equity investments include funds that are not listed on a public exchange and are not easily accessible to most individuals. These investments range from initial capital in start-up enterprises to leveraged buyouts of mature corporations. Private equity typically represents long-term commitments that are at least 12 years. Private assets are illiquid relative to publicly traded investments and, when employed consistently as part of a larger diversified portfolio, can offer higher returns while reducing overall portfolio risks.

The TRSL private equity investment program began in 1995 and is invested primarily in limited partnerships. The partnerships, which are managed by a general partner, acquire or create ongoing businesses or operating companies. Ultimately, the companies are sold in the public market or to strategic or financial buyers, and only then can the true return on investment be accurately measured.

Real assets
The TRSL real assets program is an externally managed selection of partnership investments intended to provide alternative portfolio characteristics when compared with stock and bond investments. The majority of the TRSL partnerships in this asset class invest in high quality and opportunistic real estate leased to third parties. The combination of steady income generated from lease payments and the potential upside from appreciation combine to generate returns that are expected to fall between the returns for fixed income and equities.

The real assets portfolio is managed to deliver risk-adjusted returns that are consistent with the long-term return expectations for the asset class. The real assets portfolio will also target investments in agriculture, commodities, infrastructure, natural resource rights (such as mining), and timber. Each of these sectors has different return attributes, and thus, will provide diversification benefits to the overall TRSL portfolio.

Debt related
The TRSL debt-related asset class is a portfolio of public and private higher yielding fixed income securities. Debt-related investments include high yield portfolios, mezzanine portfolios and senior secured bank loans. The portfolio is externally managed by domestic and global investment managers. Each manager is responsible for achieving the highest total rate of return possible while maintaining a prudent level of risk.

Private Assets: Market Values and Returns (as of June 30, 2017) - PRELIMINARY
Account Total Market Value ($) Fiscal Year Ending (%) 1-Yr Ending ($) 5-Yrs Ending (%) 10-Yrs Ending (%)
           
TOTAL FUND 18,527,266,282 15.05 15.05 10.12 5.28
TRSL Policy Benchmark   14.24 14.24 9.78 5.28
           
ALTERNATIVE ASSETS & REAL ESTATE 5,412,907,008 13.37 13.37 11.72 7.29
TRSL Private Asset Benchmark   14.32 14.32 12.12 7.25
           
PRIVATE EQUITY 2,223,452,153 16.85 16.85 13.92 9.29
INFRASTRUCTURE 338,901,235 11.92 11.92 1.14  
COMMODITIES 274,352,920 31.29 31.29 6.51  
           
REAL ESTATE 1,546,060,039 6.75 6.75 12.68 4.59
TRSL Real Estate Benchmark   8.12 8.12 11.83  
           
PRIVATE MARKET DEBT 1,030,296,984 12.98 12.98 9.29  
ML HY Master II Index + 200bps   15.01 15.01 9.00 9.58
NOTE: Performance is net of fees.