By JOEL FRANK
The Trustees of the Teachers' Retirement System of the City of New York recently published its investment returns for the Tax-Deferred Annuity Plan. The figures are for the 1-, 3-, 5-, 10-, 15- and 20-year periods ending on Dec. 31, 2008. The chart and TRS commentary can be found at: www.trs.nyc.ny.us/brochure/IS News.pdf
In order to prove their assertion that one should not invest in the equities market for the short-term, the TRS trustees zero in on the 15-year period Jan. 1, 1994 through Dec. 31, 2008. During this period, there was much short-term volatility (ups and downs) in the stock market. As a result of this volatility, the Diversified Equity Fund (formerly Variable A) was the clear loser, with an accumulation of $20,675, compared to the Stable-Value Fund with an accumulation of $25,554 and the Fixed-Return Fund with a stunning value of $34,472 (named "Fixed" because the State Legislature fixes the guaranteed rate of return).
Most observers would say that 15 years is a long term but the Diversified Equity Fund still came in last, so let's go to the longest reporting period, 20 years. One would think that the Trustees' comment: "Historically, however, equity investments have performed well over the long term" would be borne out by the 20-year performance of their Diversified Equity Fund. Their own data, however, proves their assertion wrong. For the 20-year period Jan. 1, 1989 through Dec. 31, 2008, the Diversified Equity Fund (formerly Variable A) was, again, the clear loser, with an accumulation of $40,685 compared with the Stable-Value Fund at $40,698, and the Fixed-Return Fund with a whopping accumulation of $58,585.
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