Who does system work for?
by Ed O'Boyle - posted Thursday, February 21st, 2013 @ 12:00 pm

The grand strategy of the Teacher Retirement System of Louisiana is to invest its portfolio of funds to "achieve maximum returns and minimize risk" (p. 29, 2012 annual report). A first-year college student in finance knows that it is literally impossible to maximize returns and minimize risk because returns are tied to risk. The greater the risk, the higher the returns.

In fairness, the reports also states that the System's assets are invested to "maximize the total return on investments within prudent parameters of risk" (p. 46). Whoever prepared this report needs to clean up this internal inconsistency and any muddled thinking that contributed to it. Much is at stake – asset holdings of nearly $14 billion that provide benefits for more than 152,000 retired and actively employed educators.

There would be little reason to dwell on this matter, were it not for several other problems in the TRSL annual report.

• No executive summary that in a few pages tells the reader in plain language the essentials of the System's performance.
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Edward J. O’Boyle is Senior Research Associate with Mayo Research Institute. He has offices in West Monroe, Lake Charles and New Orleans. He can be reached at 381-4002 or edoboyle@earthlink.net.