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INVESTMENTS

Pooled assets, professionally managed

The assets of TRA, the Minnesota Public Employees Retirement Association (PERA), and the Minnesota State Retirement System (MSRS) are pooled and managed by investment professionals at the State Board of Investment (SBI) in accordance with Minnesota Statutes, chapters 11a and 356a.

Investment objectives

TRA’s pension contributions from employees and employers are invested in the Combined Funds. The Combined Funds include the assets of active and retired public employees who participate in the defined benefit plans administered by

  • TRA
  • Minnesota State Retirement System
  • Public Employees Retirement Association.

TRA does not own any underlying assets, but instead owns a participation in the pooled Combined Funds. Because these assets normally accumulate for thirty to forty years, SBI’s objective is to take advantage of the long investment time horizon offered by equities and alternative assets in order to meet its actuarial return target and ensure that sufficient funds are available to finance promised benefits at the time of retirement. The 2018 Legislature lowered the actuarial return assumption from 8.5 percent to 7.5 percent annually.

The long term objectives of the Combined Funds are:

  • Provide returns that are 3-5 percentage points greater than inflation over the latest 20-year period; and
  •  Outperform a composite market index weighted in a manner that reflects the actual asset mix of the Combined Funds over the latest 10-year period.

Consistent with these objectives, the SBI maintains a long-term strategic asset allocation policy target for the Combined Funds as follows:

Public Equity, 50 percent
Fixed income, 25 percent
Private Markets, 25 percent

Based on the values as of June 30, 2021, the Combined Funds’ 20-year annualized return was 8.1 percent, which exceeded inflation as measured by CPI by 6.0 percentage points. Over the last 10-year period, the Combined Funds returned 10.4 percent, outperforming the composite index by 0.3 percent. Investment returns ranked in the 1st percentile over the past 5 and 10-year time periods and in the top 5th percentile over the past 20 years, compared to other public plans with over $20 billion in assets in the Trust Universe Comparison Service.​

Refer to the Minnesota State Board of Investment website for investment details.

TRA Investment Returns and Inflation Analysis

Refer to the TRA Annual Financial Report, Investment section, for details.

Investment performance

Combined Funds Performance vs. Composite Index
FY 2017 – 2021

Combined Funds Performance vs. Composite Index  2017 - 2021 vs.5 Yr. - 20Yr.

Combined funds

Portfolio Distribution: Policy Asset Mix
(as of June 30, 2021)

Portfolio Distribution: Policy Asset Mix(as of June 30, 2021)

 

Portfolio Distribution: Actual Asset Mix
(as of June 30, 2021)

Portfolio Distribution: Actual Asset Mix(as of June 30, 2021)