Texas TRS to audit PE fee data

The $133bn pension fund also expects the number of its fund managers providing the ILPA fee template to more than double by June.

The Teacher Retirement System of Texas (TRS) is ramping up its efforts in private equity fees and expenses transparency.

The $133.4 billion pension fund, which has 12 percent of its assets in private equity, plans to audit the fee data provided by its external private equity fund managers, according to materials for its 6 April meeting.

It was unclear whether TRS had conducted an audit of this kind. A TRS spokeswoman was not immediately available for comment.

TRS chief audit executive Amy Barrett said at the February board meeting private equity fee transparency is an issue not only at TRS but nationwide, the recent meeting materials showed, and she pointed to the unclear accounting rules as the main challenge although did not specify the relevant rulemaking body.

In the same discussion, TRS senior director of private equity Neil Randall noted that 32 percent of the pension’s general partners were using the International Limited Partnership Association template in the fourth quarter of 2016, but expects that share to jump to 80 percent by June.

The Austin-based pension fund has been an early sponsor of the ILPA fee reporting template released last year in an effort to standardise the fees and expenses reporting procedures across the industry.

Randall added TRS gave its fund managers plenty of time to build capacity for providing ILPA template reporting.

This follows TRS’s remarks given to Private Equity International at the end of 2016 that it believes GPs shouldn’t try to squeeze out every dollar in fees and carried interest, as the market may turn around in the future.

During the fiscal year ended 31 August, TRS had paid $207 million in private equity carried interest, according to its December board meeting materials.

The ILPA website indicates TRS is among 63 LPs and 16 GPs who have endorsed the fee template. Other LPs in the group include the California Public Employees’ Retirement System, Ontario Teachers’ Pension Plan and State of Rhode Island.

In March, TRS committed $300 million to tech-focused buyout fund Silver Lake Management Company V, the pension’s spokeswoman said previously.

In October, TRS ranked first in an annual list compiled by the American Investment Council that analyses the private equity portfolio performance among US public pension funds, having produced a 15.4 percent annualised 10-year net return.