The historic decision to invest in emerging markets by the biggest public pension fund in Texas may force some 1.5 million teachers to increase their required monthly contributions to keep the retirement system solvent, according to a new report by McGraw Fellow Bradley Keoun.
The story, published by TheStreet, breaks down why Texas officials decided to pump nearly 10% of the state’s biggest public pension fund, the Teacher Retirement System, into stocks from countries like Brazil, Russia, India, China, Mexico, South Africa and Turkey.
Investing in emerging market stocks are considered risky because of widespread government corruption, volatile currencies and unstable economies. Keoun reported that emerging market stocks have produced investment returns averaging just 1.1% per year over the past decade, well below the Texas fund’s overall target of 8%, and a fraction of the 11% average return projected by state officials back in 2007.
Keoun is the Senior Global Finance and Economics Correspondent for TheStreet. He was a lead reporter for a Bloomberg investigation into the Federal Reserve’s secret emergency loans during the financial crisis as well as its coverage of the “London Whale” trading scandal in 2012. Keoun is a past recipient of the Investigative Reporters and Editors Freedom of Information Award and the Society of Professional Journalists Award for Public Service in Online Journalism.