Message from the Chairman: The Pension System Named one of Top-Performing Pension Plans
We have very good news to report. Once again, our Pension System has been recognized as one of the most successful, well-managed public pension plans in the country. NEPC, the nation’s largest independent institutional investment consulting firm, informed us that over the last 10 years, we are one of the top performers in the country with an 8.5% return on our investments, despite the worst economic recession in our lifetime. Additionally, the Texas Association of Public Employee Retirement Systems (TEXPERS) will soon release its annual report naming us the best performing pension plan in Texas over the 20-year period ending September 30, 2012 with an annual return of 9.1%.
We’ve been able to come through this challenging period because years ago, the Board made a decision to more broadly diversify its investment portfolio. It was a bold move at the time. We did it because we didn’t want to rely so heavily on stocks and bonds. We’ve invested in agriculture products such as timber, apples and nuts, green energy, health care, and real estate. And, we invested around the world to protect our fund when the economy slips in one geographic region or another. The result is, according to NEPC, our pension system has done an outstanding job of reducing volatility – better than 88% of all other public plans.
Another reason for this successful strategy has been our Pension System’s long-term outlook on investments. Most investors need quick returns. We take the view that our investments are over the lifetime of our members – roughly sixty years. That means we can hold investments through down cycles like what we’ve just been through and be well positioned after the market recovers.
The Dallas Morning News article that you may have read in Sunday’s (2/17/13) paper focused only on one part of a well-diversified portfolio. The reporters focused on several high quality investment projects and properties that we acquired prior to the recession. Reporter Gary Jacobson said in an internet video preview of the story that, “the Pension System has been very aggressive to make its (goal of) 8.5% annualized return. To reach (it) the pension system has gone into alternative investments like real estate and private equity.” One such example is the 3,000 acres of vineyards and historic property in Napa California. It’s unlikely that anyone will ever have the opportunity to develop this much prime property in Northern California, again. We’ve now received all the permits, and are now beginning the careful and respectful redevelopment of the property. We believe this has the potential to be one of the most successful development investments we’ve ever made.
We also own a portfolio of beautiful luxury homes in such places as Hawaii, Colorado and Utah. The luxury home market is recovering faster than any other home sector. In fact, we sold one of the homes just last week, and have a lot of interest in the other properties. If you’re wondering why the news media would spend months and months investigating our investment portfolio, I can only tell you that there are a lot of people who want to see defined pension plans replaced with 401k plans. I promise you your Board of Trustees will do all we can to prevent that from happening.
We have a particularly active Board that goes to educational conferences to keep up to date on best practices in pension plan administration and investing. Board Members visit our congressional delegation and legislators to advise them regarding our position on pension issues. We even personally visit a project or property when we feel we need to see it for ourselves. And, we have an outstanding professional staff that takes a hands-on approach to overseeing our investments rather than relying solely on investment managers.
Chairman of the Board of Trustees
Dallas Police & Fire Pension System
4100 Harry Hines Boulevard, Ste. 100
Dallas, Texas 75219
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