The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 39 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 1 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
India, not the US, will be the dominant market in the 2020s
“And I don't think the U S is going to be the dominant market in this decade. At this point, it's probably going to be India.”
Texas Teachers maintains a unique zero percent allocation to credit
“And then we also have, which is pretty interesting, we have zero allocation to credit, which is a little bit unique. Most public pensions have some allocation of credit. We don't have any.”
Texas Teachers excludes venture capital from its emerging manager program
“We don't allocate to venture capital in our emerging manager program. And there are a lot of emerging managers in venture capital. But we've not had success there.”
Texas Teachers instituted proxy policy to systematically vote against activist shareholders
“Several years ago we went to our proxy provider and we said, We're going to need you to come up with a new benchmark policy for us that takes out these more activist types issues, and we suggested they call it the strict fiduciary policy, and they actually end…”
AI will accelerate market efficiency, making alpha harder to generate
“Alpha is going to get harder and harder and harder. It already has gotten harder. AI is going to actually speed up that as well. And so as investors thinking about beta is going to become more and more important over time and having the best beta you possibly …”
Texas Teachers maintains a unique 6% dedicated energy portfolio allocation
“For us, it's a real advantage as other types of investors globally are prohibiting or withdrawing from investing in energy. I mean, we're very much open for business and we see it as a crucial opportunity for us. So we've leaned into that. We have that six per…”
Auby: Texas Teachers only backs solar and wind on strict return basis
“We don't necessarily see it as our role to invest in that solar and wind. We will, but we'll only do it on a straight return, you know, maximized return, strict fiduciary basis. We'll do it if it's a good investment, but We find that others want to invest in t…”
Texas Teachers rejects climate lens in favor of strict fiduciary risk-return
“We are very much in that strict fiduciary mindset where we're not thinking about the climate lens in particular on the portfolio as a lens separate and distinct from just thinking about risk and return on a portfolio.”
Data center investing is fundamentally about access to power, not land
“Usually when you're investing in farmland, you're not actually buying the land. What you're really buying is access to water. It's more about water than it is soil. And so data centers is the same thing. It's about access to power.”
Playing naive effectively deters unethical propositions at work, Auby advises
“Naivete is a great tool in an ethically challenged situation. So if someone's coming to you with something that's maybe ethically challenging, and if you ask why a lot, and you're like, well, why does this make sense? And why is this helpful? People just go aw…”
Python has largely replaced Excel in institutional finance, says Auby
“Python has certainly taken over everything that we do on the finance side, even at Texas teachers. I mean, kids show up and it's not necessarily just Excel anymore. It's Python programming.”
Public pensions and endowments are among the only unlevered capital pools
“It's a pension fund is not levered. So it's one of the only pools of capital on the planet that doesn't actually have balance sheet leverage. So you're talking about a public pension funds, endowments, and sovereign wealth funds. These are the unlevered pools …”
Auby: Pension risk management is about efficient deployment, not existential survival
“What it shifts from is not so much catastrophic risk, not so much existential risk, Run on the bank type risks. It turns into more, how do you most efficiently use risk, most efficiently deploy it?”
Auby: Texas Teachers applies 4% leverage for 104% asset exposure
“Eight percent is risk parity. And finally, we are levered about four percent. So we are up to a 104% of assets versus a hundred percent of NAV value.”
Private market valuation lags make portfolios look artificially diversified
“There's one type of smoothing in that evaluations don't occur as regularly as you do in the public market. The other thing that occurs is everything's lagged as well. So both of those things are going to show you to be more diversified than you actually are.”
Auby: Texas leads the nation in oil, gas, solar, wind, and batteries
“Texas is number one in pretty much every form of energy you can name. So number one in oil, number one in gas, number one in solar, number one in wind, number one in batteries. I just read the other day.”
Auby: TRS holds 49% of its portfolio in alternative assets
“So we have 11% of our portfolio in hedge funds, and that's in addition, by the way, to that 38% of private, so total alternatives is 49%, which again is quite high for a public pension, but quite low versus the endowment community.”
Auby: Bifurcating zero-beta and directional strategies is fairest hedge fund benchmark
“And so we measure that stable value hedge fund portfolio versus a cash-like benchmark plus a spread. Then we measure that directional portfolio versus a full beta long only equity benchmark. And so we overlay that portfolio with derivatives in order to achieve…”
Auby: Public pensions are among the world's most liquid capital pools
“Public pension funds are some of the most liquid pools of capital in the world, and there's a lot of implications for that. You have liquidity at the times you need it. You can go in liquid when illiquidity is being rewarded.”
Venture capital capacity limits restrict large public pension allocations
“So venture capital, for example, can be difficult for us to ask because the gating item for venture capital is oftentimes not capital. We have lots and lots of capital, but if someone has a five hundred million dollar fund and we say we want two hundred millio…”
Auby: Institutional peers pass on great investments due to rigid asset-class silos
“Sometimes the most attractive, interesting investments are the ones that most of your peers said no to because they all said, well, is this a private equity deal or is this a credit deal or is this a real estate deal or is this an infrastructure deal? We don't…”
Auby: Remote work enables Austin talent to leave TRS for New York firms
“Working from home has hurt us a little bit, actually, because people can now, for example, work from home for an employer in New York City, and then move to Austin. And so they don't need to necessarily change employers. And folks can leave us And join a firm …”
Auby: TRS decentralized investment committees into separate asset class verticals
“One thing we did was to make sure that we had one internal investment committee that approved all investments for the entire fund. And now we've put investment committees into each vertical. So now there's a private equity investment committee, a real estate i…”
Auby: Investment committees function best with five to six members
“So the size of a committee is very important. You want it large enough that you get a very diverse set of viewpoints, but you don't want it too large because then there can be a real free rider problem actually when you have a committee that's too large and yo…”
Auby: Office buildings make up only 21% of commercial real estate
“Everyone still thinks of office buildings, but office buildings is last I saw just 21% of the commercial real estate market.”
TRS requires emerging managers to graduate or exit after three funds
“As a general rule, we'll do three funds with an emerging manager, and then we have to make a decision. Do they graduate, or are we done with this relationship? Because at that point, we no longer consider them to be emerging.”
Texas Teachers has graduated only 12 of 190 emerging managers
“Of those 180 managers that we funded, we've had 12 graduate to full-fledged allocations in the portfolio.”
Texas Teachers achieved near 100% '1-or-30' fee adoption in directional hedge funds
“In our directional hedge fund portfolio, we have near a hundred percent achievement of that one or 30 over an appropriate risk benchmark fee structure.”
Texas Teachers secured 60 signatories pushing for hedge fund cash hurdles
“So we've launched a second initiative this time, and we have 60 signatories to the letter we put together, and it's the idea of in a zero beta portfolio using cash, paying fees worth a cash hurdle.”
Auby: Once lost, personal reputation can never be fully recovered
“You only have a triple A rating once. Once you lose your triple A rating in life, you'll never get it back. Maybe you can come close, but you'll never get that triple A rating back.”
Auby: Where active hiring occurs signals where the next innovative market is
“One of the great things about being young is, whoever's hiring, that's where the innovation is. That's the next market.”
Texas Teachers peaked at 42% private markets and is now at 38%
“Over time, Texas teachers, at our height, we were 42% private versus a 35% neutral, or down to about 38% private versus, still versus a 35% neutral now, and it really became tail wagging the dog, because there's more risk in private markets than there is in pu…”
Auby: Texas has the longest US teacher pension liability at 26 years
“Texas has the longest liability of any teacher fund in the United States, and that's because Texas is a high-growth state, so we're hiring a lot of teachers, so we have a lot of younger teachers, and so our liability is amongst the longest, 26 years.”
Auby: TRS manages $200 billion with 240 staff members
“We have 240 people and two hundred billion dollars.”
Texas Teachers lost 25% of its staff during the Great Resignation
“In 21 and 22 combined, those two years, we lost 25% of our staff, which was one in four folks walked down the door, the great resignation.”
Texas Teachers invests in data centers across PE, real estate, infrastructure, and debt
“One example might just be data centers, which is something that we're investing in, in private equity. We're investing in it in real estate. We're investing in it in infrastructure and we're investing in it in debt.”
Auby: Industrial makes up 34% of the ODCE real estate index
“In fact, and the most commonly used core index, the Odyssey industrial, which Amazon warehouses, that sort of thing is 34% of the index is the largest part of the index.”