Railroad Retirement Board
National Railroad Retirement
Investment Trust
Quarterly
Update
For The Period Ending
The National Railroad
Retirement Investment Trust (the "Trust") issues a Quarterly Update
to provide current information on the Trust’s operations and activities
relating to its investment operations. This update reports on the Trust’s
activities for the quarter ending
As of
Investment Objectives
The Trust’s primary
investment objectives are to establish a portfolio that will achieve a long-
term rate-of-return on assets sufficient to enhance the financial strength of
the railroad retirement system and to do so in a diversified manner that
minimizes the risk of large losses. Achievement of these objectives will
facilitate the payment of benefits by the Railroad Retirement Board and the
United States Treasury. To further these objectives the Trust has established
an asset allocation policy and will seek to add value by obtaining returns that
are in the aggregate greater than the returns of its strategic policy benchmark
for this asset allocation. In addition, the Trust takes other appropriate steps
to manage investment risk and volatility effectively.
In 2002, the Trust conducted
its first comprehensive asset allocation study for the purpose of analyzing
alternative asset allocation strategies for the Trust. The study analyzed the
long-term expected return, risk, and return correlation of various asset
classes, as well as the expected return and risk of various portfolios of these
asset classes. In 2004, 2006, 2008, 2009, and 2011 the Trust took steps to
review and update its asset allocation. As a result of these reviews, the
Trustees have refined periodically the Trust’s asset allocation policy and
strategic policy benchmark.
Trustees:
Chair
James A. Hixon
, Executive Vice President – Law & Corporate Relations,
George J. Francisco, Jr., National
Conference of Firemen & Oilers - SEIU
William C. Walpert National Secretary Treasurer Brotherhood of
Locomotive Engineers and Trainmen
Joel Parker, Special
Assistant to the President & International, Vice
President Transportation Communications International
Richard G. Patsy, Assistant
Vice President Pensions and Investments CSX Corporation
William F. Quinn Independent
Trustee
C. Alec Vincent, Assistant
Vice President Finance & Treasurer Burlington
The Trust's current asset
allocation policy and strategic policy benchmark are contained in its
Investment Guidelines which are included as Appendix B of the Trust’s Annual
Management Report.
The investment performance
for the Trust, and the change in market value of
Trust-managed and RRB-held assets for the most recent quarter are summarized
below.
|
Investment Performance
– Net of Fees for the Quarter ended |
|
|
Trust-Managed Assets: |
4.29% |
|
|
|
|
Strategic Policy
Benchmark: |
3.40% |
|
Market Value of Assets |
|
|
Trust-managed assets |
|
|
As of |
$22.2 |
|
As of |
$22.9 |
|
Change for quarter ended |
$ 0.7 |
|
|
|
|
Trust-managed assets
and RRB assets held in reserve |
|
|
As of |
$23.7 |
|
As of |
$24.1 |
|
Change for quarter ended |
$ 0.4 |
|
|
|
|
As of |
$20.7 |
|
Transfers to the Treasury |
$-11.9 |
|
Total change in assets
since inception |
$15.3 |
|
As of |
$24.1 |
Financial Market
Volatility
The Trust originally
deployed assets received from Treasury into a diversified and balanced
portfolio of US and non-US equity and US fixed income
securities. Over time, the Trust has furthered that diversification by
allocating a percentage of the portfolio to non-US fixed income securities,
private equity, real estate, and commodities. As mandated by its statute, the
Trust has avoided undue concentration of investment in any asset class, type of
security, or market sector. This policy of broad diversification is intended to
serve the Trust well in strong markets and to protect its assets from
disproportionate market shocks in volatile periods such as have been
experienced in recent years. As part of this diversification process, the Trust
holds tens of thousands of different securities selected by its investment
managers for its portfolio.
In this volatile investment
environment, Trustees and investment staff continue to monitor carefully the
Trust’s existing investments, and examine ways to refine its strategies to
invest Trust assets in the most effective and prudent manner. The Board of
Trustees will continue to manage the assets of the Trust as a patient,
long-term investor, recognizing its responsibilities to the railroad retirement
system, its workers and retirees. As a long-term investor, the Trust expects to
benefit from the long-term recovery of financial markets.
Annual Report
The Trust’s Annual
Management Report contains additional information regarding the Trust’s
investment activities as well as other financial information. This report can
be found on the Railroad Retirement Board’s website at http://www.rrb.gov
Public Affairs 312-751-4777
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