TCDRS outlines revised investment policy for 2021

The US public pension has highlighted a revised investment policy following its latest board meeting.

Institution: Texas County and District Retirement System
Headquarters: Austin, US
AUM: $38.1 billion
Allocation to alternatives: 50.9%

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

Highlights from the revised investment policy include:

  • The consideration of distressed debt investments in both the US and other regions. In the long-run, TCDRS expects the performance of the distressed debt component of the private credit portfolio to exceed that of the wider asset class by 3 percent.
  • TCDRS is considering private debt investments outside of the typical direct lending, preferred equity and senior and mezzanine debt origination the pension typically invests in. Other potential lending components under consideration include non-correlated funds as well as royalty streams and leasing.
  • TCDRS may also consider future co-investments alongside the pension’s existing managers, with this including the potential for both control and non-control positions with regards to investment discretion within the vehicle. Any potential co-investment must be consistent with the relevant manager’s strategy, focus and skill set. The pension fund is considering allocating to a maximum of 10 co-investments per year.

This revision to the policy was recommended to the board by chief investment officer Casey Wolf. 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 29 percent target allocation to private debt that currently stands at 24.1 percent. In June 2021, the $38.1 billion pension approved a $175 million commitment to Arbour Lane Credit Opportunity Fund III alongside $25 million to Venture Lending & Leasing X.

As of the end of H1 2021, TCDRS had made commitments to eight direct lending funds, alongside three vehicles each focused on distressed debt and strategic credit out of its wider private debt portfolio.

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