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How Trump's Re-Election Could Impact Taxes, Tariffs, and Retirement Policy for Public Pensions and Retirees

Donald Trump's re-election to the U.S. presidency and the Republican Congressional wins have introduced a wave of uncertainty and opportunity for leaders of public employee pension systems. With significant changes likely on the horizon for tax policies, trade tariffs, retirement benefits, and investment regulations, it's crucial for those managing the funds of active and retired annuitants to stay informed. This article unpacks how these potential policy shifts could impact public pensions and the broader retirement landscape, providing valuable insights for stakeholders navigating this evolving environment.

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Join Us for TEXPERS' Annual Conference in Dallas, Texas

Are you ready for an unforgettable experience that combines professional development, networking opportunities, and the chance to celebrate three decades of excellence in pensions? Look no further than the Texas Association of Public Employee Retirement Systems (TEXPERS) 35th Anniversary Conference, set to take place from April 7 to 10, 2024, at the Hyatt Regency Dallas in Dallas, Texas.

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Pension Review Board Reports on System News

On June 29, the Texas Pension Board received updates on the recent progress and changes pension funds have made. The City of Midland and pension officials presented their case at the beginning of the meeting, and PRB staff actuary David Fee followed on with additional reports:

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Maximize Your Success

As members of the pensions and investments industry, we know that professional development is essential for staying current on trends and regulations. TEXPERS is proud to host its Summer Educational Forum in The Woodlands, Texas – an annual event designed to provide public employee retirement system administrators, board members, and other key stakeholders with the necessary tools and resources to maximize their professional growth. In this blog post, we'll discuss how you can make the most out of your experience at the conference and prepare for success!

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Report Warns of More Economic Shocks

A recently released report from Ortec Finance has some interesting findings about the U.S. public pension plan sector. According to the Ortec Finance report, 90% of public sector pension plan managers expect to increase spending on scenario modeling and stress testing in the next two years to manage market shocks. For TEXPERS System Members, scenario modeling and stress testing are familiar tools they use to better understand how market volatility may affect their pensions. We'll look at the report's key findings and provide context. 

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Next-gen Security Providers Offer Products That Protect Multiple Parts of the IT Supply Chain and Use AI to Find Network Anomalies or Threats

Over the past decade, as businesses have undertaken digital transformation initiatives to improve efficiencies and outcomes, cyberattacks have continued to increase in both frequency and complexity. These cyberattacks are increasingly committed by well-funded criminal and state-sanctioned groups seeking to exploit vulnerabilities and disrupt operations for financial gain or to steal intellectual property and other sensitive data for competitive gains or national intelligence purposes. Since the onset of the COVID-19 pandemic, businesses of all sizes have responded to new, unexpected customer and employee needs by accelerating their investments in digital technologies. These investments have not only driven positive business outcomes but have also created new areas of vulnerability for companies across their entire technology supply chain and infrastructure. The increase in the number of endpoints resulting from the exponential growth of mobile computing and Internet of Things (IoT) devices, as well as the larger technology infrastructure surface areas supporting cloud-computing needs, has provided cyber attackers with more areas to potentially exploit and gain unauthorized access. These cyberattacks contribute to a wide variety of adverse outcomes—lost revenue from network downtime, increased costs from ransom payments, fines and/or mitigation spending, lost data integrity, impact to the business from increased reputational risk and, in certain cases, national security risks. As businesses continue to invest in digital transformation to accelerate growth initiatives, the increased threat from cyber criminals will also require larger and more targeted investments in next-generation cybersecurity defense technology to protect digital assets and networks while minimizing the operational and financial costs of a cyberattack.

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Approaching Investing in The Republic of China

China’s economy and markets are not only too large to ignore, but they are now so large that there is a small but growing group of investors who approach China as a specific investment allocation.

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As Globalization Slows and Labor Markets Tighten, Inflation Will Rise

As we settle into the first quarter of 2023, it’s worth discussing the current cycle and the implications for markets in 2023—but the bigger issue is the developing likelihood we have begun to shift into a different economic and market environment, marking a different era than we have seen in the decade-plus since the Global Financial Crisis (GFC). 

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Listed REITs Have Likely Priced in a Recession; Analysis Points to a Recovery Next

Investors have priced in a negative, forward-looking view of listed real estate. Slowing growth and higher inflation have created a stagflationary backdrop that has been especially challenging for REITs. The result is that there has been a dramatic performance difference between listed and private real estate in 2022. While REITs, as measured by the FTSE Nareit All Equity REITs Index, are down -27.9% through September and down -21% through November, the NCREIF ODCE index, a measure of private real estate that is calculated quarterly, is up 13% through September on a total return basis. Based on history, we believe that gap in performance will not persist. Indeed, private real estate returns are just beginning to slow as expected. Private real estate typically lags listed real estate due to its slower-moving price discovery and transactions.

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Brief Finds State and Local Pensions Should Stabilize Debt as Share of Economy Instead of Fully Funding Them

The author of a new brief from the Center for Retirement Research at Boston College finds that state and local pension plans should focus on stabilizing their pension debt as a share of the economy rather than full funding. The alternative of fully prefunding state and local pensions to maintain fiscal sustainability will mean big contribution hikes. 

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Book Your Conference Room by March 10 to Get a Special Rate

As conference attendees, finding a convenient and comfortable place to stay can be difficult. Staying at the on-site hotel of a conference venue is more convenient than staying off-site. 

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Texas Governor Touts Economy, Outlines Priorities During State of the State Address

State and local government public pensions weren't among Gov. Greg Abbot's State of the State address on Feb. 16; however, he did discuss the importance of the public education system in Texas, touted previous increases to teacher pay, and said the current legislative session could do even more for the educational system and teachers. 

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European Financial Services and the Macro Outlook: Misconceptions and Realities

Political and diplomatic turmoil in Europe have, perhaps inevitably, led to misconceptions about the economic landscape and the continent’s financial services industry. In reality, differences with the US market are far narrower than expected and a significant opportunity exists for an experienced control investor.

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The Energy Transition and the Search for Energy Security: Implications and Opportunities for Listed Infrastructure

Natural gas prices have surged in recent months. Acute supply concerns in Europe have predominantly driven the surge, which has been exacerbated by severe heat waves that have increased demand for power and reduced traditional power generation capacity.

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Is Shipping Cost Inflation About to Peak?

From their peak earlier this year, the spot trucking rates have been in decline, marking a shift versus prior years. Given how impactful the inflation in shipping costs had been across the broader economy from 2020 to 2022, the recent change in trend has widespread implications for many companies.

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Inflation Reduction Act is a Net Positive for Listed Infrastructure

The Inflation Reduction Act of 2022 (IRA) addresses three key areas: climate issues, corporate taxes, and healthcare.

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Recessions and Midstream Energy Infrastructure: Why Its Better Today Than Previous Years

 

The Federal Reserve (The Fed) is fighting decades-high inflation with aggressive monetary policy. Many market watchers now expect at least a mild recession in response. The S&P 500 Index's 17.3% loss and the NASDAQ's 25.5% loss year-to-date through 6/24/2022 would suggest equity investors share this concern (year to date, the Alerian MLP Index (AMZ), a midstream energy focused index, is up 9.2%). To understand how midstream might perform through such an environment, we thought a look at history could be helpful.

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ESG Portfolio Monitoring

For institutional investors, ESG-related initiatives are ultimately about managing risk. As noted by the Organization for Economic Co-operation and Development (OECD), a poor environmental record may make a firm vulnerable to legal or regulatory fines/sanctions; socially, the mistreatment of workers and dissatisfied employees may lead to higher absenteeism, lower productivity, and weaker client servicing/relationships; and weak corporate governance may incentivize and/or enable unethical behaviors related to pay, accounting irregularities, and even fraud.1 For all these reasons and more, identifying and addressing material ESG-related issues germane to a corporation is a quintessential exercise in risk management – for the management of that company, for investment managers thinking about holding that security in their investment portfolio, and for asset owners concerned whether the manager is acting in accordance with fund policies.

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Venture Capital’s Unique Ability to Navigate Volatile Markets

Venture capital (VC) has performed extremely well over the last 5, 10, and 15 years, beating the S&P 500 by more than 700 basis points on average.1 Across market cycles, we have witnessed certain vintages reward investors with truly outsize returns, and we feel confident that current conditions could lead to similarly high-returning vintages. As we enter a period that we believe will be defined by less capital raised, smaller fund sizes, slower investment pacing, fewer market participants, and lower valuations, perhaps the time to overweight is now.

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Convertible Investment Study

Convertibles securities' hybrid structure has historically made for a compelling asset class in virtually any market environment. An outright allocation to convertible securities has the potential to provide investors with the best of all worlds – favorable asymmetry of returns through participation in upside momentum along with an important measure of downside protection.

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