Each week, TEXPERS presents you with free or low-cost ways to gain insights into current trends, research, and news related to public pension management, governance, policymaking, investments, research, and retirement—all from the comfort of your office.

In 2020, assets (cash and investments) for state- and local-administered defined-benefit public pensions systems totaled $4.6 trillion, an increase from the 2019 level of $4.4 trillion, according to an annual survey of public pensions released by the U.S. Census Bureau in July 2021.

Texas Rep. Tan Parker, R-Flower Mound, announced that he is not seeking re-election to his District 63 seat. Instead, he is running to replace Sen. Jane Nelson, who is vacating Senate District 12, an area that went through some shifting due to redistricting. 

AIF Global will be hosting the 2021 AIF Trustee Education Forum and Southwest Investors’ Forum on Nov. 16 and 17 at the Four Seasons Hotel in Austin, Texas. The Trustee Education Program on Tuesday, Nov. 16 is accredited by the Texas Pension Review Board and education certificates will be distributed upon completion. The program is limited to trustees and investment staff only and there is no cost to attend. 

State Sen. Eddie Lucio Jr., D-Brownsville, the third-most senior member of the Texas Senate, is retiring after three decades serving District 27.

Pension plan participants live longer than the rest of the US population, according to Club Vita. Not only do pensioners have longer life expectancies, but according to the study, plan participants also enjoy a faster rate of longevity improvements.

A forum is being held in Austin on Nov. 18 to provide insights into selected areas of interest to the Texas institutional investment community. This year marks the event's eighth iteration.

At a high level, it’s fair to say that economic and other fundamentals in developed markets (DMs) have become increasingly fragile over the past decade-plus. During that period, severe stress episodes like the global financial crisis (GFC) and the COVID-19 pandemic have spotlighted and, in some cases, accelerated this weakening of fundamentals in some countries.

As U.S. equities outperformed over the last decade, helped by superior earnings growth and innovation, relative valuations of international stocks have fallen steadily. In fact, the valuation differential between U.S. and international equities is at its widest since the 2008 financial crisis. With improved operating margins, beneficial structural trends, the likely capex revival, and fiscal spending, are international stocks positioned to outperform? We believe so.

In a world of scarcer growth and rising competition, the future belongs to companies that understand the transformative power of technology and successfully integrate it within their core business models. This was demonstrated and accelerated by the COVID-19 lockdowns of 2020. The outperformance of technology and technology-related companies is a powerful reminder that tech opportunity is no longer confined to hardware, software, and the internet giants. What’s more, the tech-driven growth is far from over. There’s a wide frontier ahead for new market leaders to emerge. Amid rapid technology change and adoption, our research points to three catalysts for earnings and revenue growth in the United States and globally:

Empower Retirement recently announced an agreement to acquire Prudential’s retirement plan recordkeeping business. The acquisition promises to capitalize on both firms’ experience and expertise to the benefit of retirement plan participants and plan sponsors. This announcement follows Empower’s earlier acquisitions of MassMutual’s and Fifth-Third Bank’s recordkeeping businesses and has become representative of the retirement plan recordkeeping industry over the last two decades.

Temporary bouts of inflation have arisen in the last two decades, prompting questions that result in lengthy webinars and white papers on the matter as those bouts materialize. On the surface, concerns about inflation appear valid. After all, the notion that higher inflation leads to higher borrowing costs, therefore increasing cap rates and applying downward pressure on valuations, is a simple concept to latch onto and cause worry. In addition, the massive injections of liquidity that governments and central banks have deposited into the global economy over the past dozen years add support for concerns of runaway inflation. 

When it comes to corporate relocations, Texas is hot, and we are not talking about the temperature or humidity. Companies from around the country are taking a hard look at moving to the Lone Star State.

Balance can be a challenging ordeal, especially when you are organizing and determining the correct allocation of real estate in a portfolio. Many pension funds will allocate around 15% for real estate investments; these are often core real estate investments that are income producing, high quality assets. By definition, these are often associated with primary markets.

COVID-19 has increased inequality and aggravated social problems across emerging market economies, fueling populist pressures—but several emerging countries share features that make them particularly vulnerable. Assessing key environmental, social and governance (ESG) metrics can help identify potential pressure points.

Crisis can be fertile ground for populism. The unique characteristics of COVID-19 may have stifled unrest initially, but the pandemic has exacerbated inequality and poverty, which could fuel public discontent, impacting political and policy paths. It has also given a double edge to the youthful nature of many emerging countries. A young demographic profile is normally a positive for economic growth but could pose challenges if the pandemic curtails business activity and permanently increases unemployment.

Political and policy shifts are arguably more likely in countries where socioeconomic conditions are more fragile and where COVID-19 scarring is deeper. But the resulting pressure for change could lead to contagion, pushing politicians across emerging markets to pursue populist policies, delay fiscal consolidation, and/or erode democratic standards.

Fed watching is once again one of the markets’ favorite pastimes. Federal Reserve officials continue to signal that they would favor tapering of bond purchases in 2021, in line with recent announcements from the European Central Bank. When and how remain to be seen. With ample speculation about the Fed, unemployment, and inflation, it might be a good time for a reminder about what Fed announcements can, and cannot, tell us about the future of fixed income markets.

The global health pandemic and economic shutdown present unparalleled challenges to the global economy. The consequences of the financial collapse were far-reaching, exposing vulnerabilities of supply chains throughout the global economy.  Recently, the disruptions at the Suez and Panama Canals created global port congestion, a shortage of shipping containers and rising costs of goods. As a result, we anticipate manufacturers will hold more inventory on or near their facilities, increase domestic production and reduce reliance on global supply chains moving forward. We believe this will result in increased demand in the U.S. for logistics real estate in addition to secular shifts like the continued growth of online retailing. “Disruptions can be a negative for companies who are unprepared to adapt to supply chain challenges, or an opportunity to differentiate if a company can secure goods when consumers need it most,” indicated Melinda McLaughlin of Prologis. “In general, most Prologis customers view these disruptions negatively due to lost sales, increased difficulty of planning and volatile prices.”