AI-assisted research summary: The board of trustees must invest retirement system assets, develop written investment objectives, and use performance measurement services; it may delegate some investment authority and contract with outside advisors, subject to a 30% limit for delegation to external managers.
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" includes any investment instrument within the meaning of the term as defined by Section 4001.068, 15 U.S.C. Section 77b(a)(1), or 15 U.S.C. Section 78c(a)(10), any derivative instrument, and any other instrument commonly used by institutional investors to manage institutional investment portfolios. 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. Subject to Section 825.3013, an interest in a title-holding entity that is wholly owned, organized, and controlled by the retirement system is considered a security. Investment decisions are subject to the standard provided in the Texas Trust Code by Section 117.004(b), Property Code. (a-1) Repealed by Acts 2017, 85th Leg., R.S., Ch. 932 (S.B. 1665), Sec. 2, eff. June 15, 2017. (a-2) Repealed by Acts 2017, 85th Leg., R.S., Ch. 932 (S.B. 1665), Sec. 2, eff. June 15, 2017. (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) The board of trustees may delegate discretionary investment authority to external investment managers to invest and manage not more than 30 percent of the total assets held in trust by the retirement system and may contract with external investment advisors and consultants to assist and advise the board and the staff of the retirement system. (b-1) By accepting a delegation of discretionary investment authority or an engagement to assist or advise the board or the staff of the retirement system under Subsection (b), an external 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 this section. 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. Acts 2017, 85th Leg., R.S., Ch. 932 (S.B. 1665), Sec. 1, eff. June 15, 2017. Acts 2017, 85th Leg., R.S., Ch. 932 (S.B. 1665), Sec. 2, eff. June 15, 2017. Acts 2019, 86th Leg., R.S., Ch. 491 (H.B. 4171), Sec. 2.21, eff. January 1, 2022. Acts 2023, 88th Leg., R.S., Ch. 1093 (S.B. 1246), Sec. 4, eff. June 18, 2023.