Investment returns for 2013 were mixed. Although the market performance for U.S. stocks were excellent, international stock returns were not as high and bond market returns were dismal. This is reflected in the annual returns of the Teachers’ Retirement System’s Passport Funds.
Members invest in the Passport Funds by participating in the voluntary Tax-Deferred Annuity (TDA) program and can choose among six different funds. Some invest mainly in stocks, or equities, which can be very volatile, as the investment results chart on this page shows. Other funds may be less volatile.
When choosing funds, you should pick those with an investment strategy you understand and a level of volatility with which you are comfortable. Many experts say that the younger you are, the more volatile your fund selection can be because you have more time to weather market fluctuations before retirement. As you grow older and have less time to stay in the market, you may wish to switch to less volatile investments.
The amount of your investment in any of the six Passport Funds can range between 5 percent and 100 percent of your total contribution to the TDA. Here are brief descriptions of each fund. Once you understand the goals of each, you can make your investment choices. More details are available from TRS’ publication “Passport Funds — Fund Profiles,” available at www.trsnyc.org.
Fixed Return Fund — Its objective is to provide a fixed rate of return, determined by the New York State Legislature. The money is co-invested with the funds in the TRS pension fund. The fund has an annual crediting rate of 7 percent.
Diversified Equity Fund — Its objective is to achieve a rate of return comparable to that of the broad equity market. The fund invests primarily in a broadly diversified bundle of U.S. stocks. About 15 percent of the fund is invested in a broadly diversified portfolio of international stocks in developed countries as well as emerging country markets. There is also an investment in defensive strategies — such as convertible bonds and a tactical asset strategy that shifts allocations in stocks, bonds and cash — to help protect against losses in down markets.
Bond Fund — Its objective is to seek current income from a diversified portfolio of high-quality bonds.
International Equity Fund — Its objective is to provide long-term capital growth with the aim of achieving a rate of return comparable to that of non-U.S. developed and emerging markets over a full market cycle. The fund is invested together with the assets allocated to the international sector of the Diversified Equity Fund.
Inflation Protection Fund — Its objective is to provide, over a full market cycle, a real rate of return that exceeds inflation. The fund uses an actively managed mutual fund that seeks exposure to multiple asset classes, which may include traditional fixed-income investments, bond strategies (e.g., global, convertible, high-yield and Treasury Inflation Protection Bonds), equities, commodities and real estate.
Socially Responsive Equity Fund — Its objective is to achieve, over a full market cycle, long-term capital growth and to earn a rate of return comparable to that of the broader equity market while reflecting social priorities. The Socially Responsive Equity Fund uses an actively managed mutual fund that mainly invests in stocks of large- and mid-cap U.S. and non-U.S. companies that meet both financial and social criteria. The social criteria for companies include responsiveness to environmental concerns, a diverse workforce, and good labor relations. This fund also avoids investing in companies that derive substantial revenue from alcohol, tobacco, nuclear power or weapons.
|The unit value is computed during the latter part of each month. Recent values are:|