Sec. 825.301. INVESTMENT OF ASSETS. (a) The board of trustees shall invest and reinvest assets of the retirement system without distinction as to their source in accordance with Section 67, Article XVI, Texas Constitution. For purposes of the investment authority of the board of trustees under Section 67, Article XVI, Texas Constitution, "securities" means any investment instrument within the meaning of the term as defined by Section 4, The Securities Act (Article 581-4, Vernon's Texas Civil Statutes), 15 U.S.C. Section 77b(a)(1), or 15 U.S.C. Section 78c(a)(10). An interest in a limited partnership or investment contract is considered a security without regard to the number of investors or the control, access to information, or rights granted to or retained by the retirement system. Any instrument or contract intended to manage transaction or currency exchange risk in purchasing, selling, or holding securities is considered to be a security. Investment decisions are subject to the standard provided in the Texas Trust Code by Section 117.004(b), Property Code.
(a-1) This subsection expires September 1, 2019, and applies to the investment and reinvestment of assets of the retirement system only if the investment or reinvestment is made before September 1, 2019. In addition to any investment or reinvestment authorized by Subsection (a), the board of trustees may buy and sell the following, only to efficiently manage and reduce the risk of the overall investment portfolio:
(1) futures contracts;
(2) options;
(3) options on futures contracts;
(4) forward contracts;
(5) swap contracts, including swap contracts with embedded options;
(6) any instrument or contract intended to manage transaction or currency exchange risk in purchasing, selling, or holding investments; and
(7) any other instrument commonly used by institutional investors to manage institutional investment portfolios.
(a-2) The board of trustees may delegate investment authority and contract with one or more private professional investment managers for investment and management of not more than 30 percent of the total assets held in trust by the retirement system. In a contract made under this subsection, the board of trustees shall specify any applicable policies, requirements, or restrictions, including criteria for determining the quality of investments or the use of standard rating services, that the board of trustees adopts for investments of the system. The board of trustees may not contract under this subsection for investment and management services to be performed on or after September 1, 2019.
(a-3) For the purpose of carrying out policy decisions made by the board of trustees, the board may delegate investment authority with respect to assets held by the retirement system to the executive director or the staff of the retirement system.
(b) In addition to the board's authority under Subsection (a-2), the board of trustees may contract with private professional investment managers, advisors, and consultants to assist and advise the board and the staff of the retirement system in investing the assets of the retirement system.
(b-1) By accepting a delegation of investment authority under Subsection (a-2) or an engagement to assist or advise the board or the staff of the retirement system under Subsection (b), a professional investment manager, advisor, or consultant submits to the jurisdiction of the courts of this state in all proceedings arising from or related to performance of the delegated authority or engagement. An action relating to services rendered under this section shall be brought only in a state district court sitting in Travis County, Texas. Chapter 2260 does not apply to a contract under Subsection (a-2) or (b). This subsection does not waive any immunity of the retirement system.
(c) The board of trustees shall employ one or more performance measurement services to evaluate and analyze the investment results of those assets of the retirement system for which reliable and appropriate measurement methodology and procedures exist. Each service shall compare investment results with the written investment objectives developed by the board, and shall also compare the investment of the assets being evaluated and analyzed with the investment of other public funds.
(d) The board of trustees may invest assets of the retirement system in obligations issued, assumed, or guaranteed by the Inter-American Development Bank, the International Bank for Reconstruction and Development (the World Bank), the African Development Bank, the Asian Development Bank, and the International Finance Corporation.
(e) The board of trustees shall develop written investment objectives concerning the investment of the assets of the retirement system. The objectives may address desired rates of return, risks involved, investment time frames, and any other relevant considerations.
Added by Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1, 1981. Amended by Acts 1983, 68th Leg., p. 5098, ch. 925, Sec. 4, eff. Aug. 29, 1983; Acts 1983, 68th Leg., p. 5100, ch. 926, Sec. 4, eff. Aug. 29, 1983; Acts 1985, 69th Leg., ch. 542, Sec. 6, eff. Aug. 26, 1985; Acts 1987, 70th Leg., ch. 167, Sec. 5.01(a)(64), eff. Sept. 1, 1987. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec. 35.301 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 408, Sec. 3, eff. Aug. 26, 1991; Acts 1997, 75th Leg., ch. 1416, Sec. 25, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1540, Sec. 17, eff. Sept. 1, 1999; Acts 2003, 78th Leg., ch. 1103, Sec. 11, eff. Jan. 1, 2004.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 124 (S.B. 1447), Sec. 1, eff. May 17, 2007.
Acts 2011, 82nd Leg., R.S., Ch. 492 (H.B. 1061), Sec. 1, eff. June 17, 2011.
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