TEXPERS members have a chance to communicate how they feel about the educational services provided by the Pension Review Board of Texas.

The world is aggressively seeking sustainability. While the topic has been around for perhaps a decade, the “awakening” really hit the public consciousness in 2020 and has now become a mega-theme. It’s transitioning into a revolution and shepherding an era of conscious capitalism that’s playing out across the investment landscape. This is not the traditional socially responsible movement that has historically involved divestment from tobacco, weapons and other so-called ‘sin’ stocks. This is about driving returns first, while providing social and environmental benefits.

While the world may have been on lockdown for most of 2020 due to the global COVID-19 pandemic, there were significant developments in non-U.S. securities litigation.

With vaccines rolling out across the globe, many see a light at the end of the tunnel for the COVID-19 pandemic. But government-imposed lockdowns and social distancing restrictions in response to the pandemic have had major effects on the working lives of office-based employees. For much of 2020, many employees worked from home (WFH), and survey-based data show that the appetite has grown for more permanent flexible working arrangements. Many employers appear to be acknowledging this desire for more hybrid remote work as they assess longer term office space requirements. What are the potential impacts on office space, commercial real estate, and urban centers from this kind of shift?

The past year has been one of considerable disruption in the way we live, work and play.  We have seen shifts in sentiment around the value of the real estate in which we conduct these daily activities. As we look to a post-vaccine world where a return to normal is in sight, we are asking ourselves: How much of the distress has been temporary and what has been permanently impaired?  At CenterSquare we have found that when it comes to real estate valuations, the REIT market offers early insight into the direction of pricing, with the private market eventually catching up. As we look out over the next several years, the REIT tea leaves provide a great deal to consider.

2020 was an incredible year in the capital markets. However, in the wake of very strong performance for both stocks and bonds over the past 12-months, as well as the past decade, most traditional assets are looking expensive. At the same time, concerns over inflation continue to build, and questions about the trajectory of Fed policy dominate investment conversations.

Institutional investors—including public pension funds, Taft-Hartley funds, mutual funds, and hedge funds—have a fiduciary obligation to recover monies lost through investments in public securities as the result of corporate mismanagement and/or fraud. These losses are often recouped through class action litigation, which pays out billions of dollars to defrauded investors each year.[1] When these lawsuits are settled, however, institutional investors often assume that their custodian will file a claim and collect the funds on their behalf. Unfortunately, this approach almost always leaves such institutions short, and benefits more savvy-minded institutional investors who often pick-up the money left on the table by those relying on their custodians.

Despite the Federal Reserve’s promise to keep the federal funds rate low and support the bond market via quantitative easing, interest rates have seen an acute increase since August 2020. The yield on the 10-year Treasury was 0.52% on August 4 and stood at 1.74% on March 31. Additionally, the U.S. Treasury yield curve has steepened dramatically since August, reflecting rising inflation or growth expectations. The “2s/10s” curve has steepened from around 0.50% to nearly 1.10% over the past year.

Throughout the pandemic many areas of real estate have suffered under the myriad of lockdowns and capacity restrictions needed to slow the progression of the virus. Office, retail and hospitality have all been hit especially hard. Unlike its counterpart, office space, both hospitality and retail have been suffering from the mass reduction of foot traffic from lockdowns and the lack of disposable income as mass unemployment has flooded the county over the past year. 

TEXPERS invited two experts with Putnam Investments, an Associate member of the association, to discuss inflation expectations. Shep Perkins, CFA, is Chief Investment Officer of Equities at Putnam and Donald E. Perks is a Quantitative Analyst with the firm.

The process of evaluating investment managers has evolved in the last several decades. In addition to comparing a manager to its benchmark, investors can compare peer groups, other investment products, and even factor-based funds to see how their manager “stacks up.”