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Texas Investments

One way the state of Texas maintains and grows its financial resources is through investments. The state as well as various subdivisions of state government use the services of the Texas Treasury Safekeeping Trust Company to manage and oversee these investments.

Texas Treasury Safekeeping Trust Company

The Texas Treasury Safekeeping Trust Company is a special-purpose trust company whose mission is to preserve and grow the state's financial resources by competitively managing and investing them in a prudent, ethical and cost-effective manner.

The Trust Company was created by the Texas Legislature to efficiently and economically manage, invest and safeguard funds for its clients, the state and various subdivisions. The Trust Company is first and foremost a fiduciary organization. As such, it is held to the highest standard of care imposed in either law or equity and obligated to subordinate its own interests to those of its beneficiaries.

The Trust Company is incorporated and established as a separate, stand-alone organization with the Texas Comptroller of Public Accounts as its sole shareholder and director. The Comptroller appoints its CEO and delegates authority to the CEO and Trust Company staff to manage the organization.

Investments

The Trust Company invests, manages and oversees close to $50 billion in assets. Investments include cash-equivalent funds, such as the Texas Treasury Pool, and separately managed portfolios for various Texas state agency clients. It oversees the state's two largest Local Government Investment Pools, TexPool and TexPool Prime. It manages 12 separate endowment funds with assets totaling more than $2.5 billion.

Endowments

The Trust Company manages 12 endowment funds. Endowment portfolios are invested across a broad spectrum of asset classes, ranging from traditional fixed-income and long-only equity investments to hedge funds, private equity and real estate. The funds are invested in a diversified manner designed to preserve the purchasing power of their assets and provide a stable and growing distribution to beneficiaries.

The distributed funds are used by governmental entities to provide funding for health care, health education, higher education and historic preservation. All funds are invested in accordance with the prudent person or investor standard.

The 12 endowments are:

  • Tobacco Settlement Permanent Trust Account
  • Permanent Fund for Health and Tobacco Education and Enforcement
  • Permanent Fund for Emergency Medical Services and Trauma Care
  • Permanent Fund for Children and Public Health
  • Permanent Fund for Rural Health Facility Capital Improvement
  • Permanent Hospital Fund for Capital Improvements and the Texas Center for Infectious Disease
  • Permanent Health Fund for Higher Education-University of North Texas Health Science Center
  • Permanent Fund for Higher Education Nursing, Allied Health, and Other Health-Related Programs
  • Permanent Fund for Minority Health Research and Education
  • Permanent Endowment Fund for the Rural Communities Health Care Investment Program
  • National Research University Fund f/k/a Higher Education Fund
  • Texas Preservation Trust Fund

TexPool/TexPool Prime

TexPool and TexPool Prime are local government investment pools created on behalf of Texas entities whose investment objectives are preservation and safety of principal, liquidity and yields consistent with the Public Funds Investment Act. TexPool and TexPool Prime currently provide investment services to more than 2,000 local jurisdictions throughout Texas.

Treasury Pool

The investment objectives of the Treasury Pool are:

  • preservation of capital and protection of principal
  • maintenance of sufficient liquidity to meet the state's operating needs
  • maximization of return

Interest rate risk is managed by maintaining a weighted-average maturity of no more than two years. The pool invests in a diversified pool of high-quality, liquid assets primarily consisting of:

  • U.S. Treasury securities
  • debt instruments of government sponsored entities (including mortgage-backed securities)
  • repurchase transactions
  • high-quality corporate debt
  • asset-backed securities

In addition, approximately 3 percent of the assets are invested in fully collateralized deposits in Texas-based banks.

View Treasury Pool Rates.

Trading, Trust, Settlement and Custody

The Trust Company separately manages assets for various state agencies including the Water Development Board, Texas Housing Authority, Lottery Commission and the cigarette stamp tax escrow account. These funds are managed to ensure safety of principal and to maintain sufficient liquidity to meet the agency's operating needs.

Through its trading desk and Settlement & Custody Services, the Trust Company acts as broker and custodian for marketable securities and mutual funds held by the Comptroller's Unclaimed Property Division. Custody and trading services are provided for certain other state agencies that may own marketable securities. For state agencies that issue debt, the Trust Company provides escrow services related to the retirement of bonds. The Trust Company also serves as the depository for newly issued bonds and performs the complex accounting functions associated with investing bond proceeds in guaranteed investment contracts (GICs).

Federal Reserve Membership and the Depository Trust Company

Texas has been granted a direct account with the Federal Reserve (the "Fed") and the Depository Trust Company ("DTC"). The Trust Company is allowed to maintain custody of assets at the Fed and DTC and to wire funds for limited purposes related to its business. Direct access to the Fed and DTC saves the state millions in fees that would otherwise be paid to commercial banks for these services. The Trust Company is not, however, allowed to compete with commercial banks.

Reports

The Texas Treasury Safekeeping Trust Company routinely measures performance via publically available reporting and audits. To view these documents, visit the TTSTC website.

Income from Major Funds Administered by TTSTC, FY 2012

  1. Treasury Pool:
    $139,457,095
  2. TexPool:
    $19,943,758
  3. TexPool Prime:
    $1,755,942
  4. Investment Pools:
    $2,804,321

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