UTIMCO eyes $345 million in hedge fund, emerging markets investments

University of Texas Investment Management Co., Austin, might invest as much as $345 million over the next six months in new hedge funds and emerging markets strategies and additional contributions to existing funds in these portfolios, according to documents presented to UTIMCO's board at a meeting on Thursday.

UTIMCO's investment department is likely to invest $60 million in a European long/short equity hedge fund and might potentially invest $60 million in a long/short equity hedge fund run by a firm with less than $500 million in total assets. A $100 million mandate might also be awarded to an emerging markets manager, according to board meeting materials.

Specifics about the new assignments were not provided in the documents, and Bruce Zimmerman, UTIMCO's CEO and chief investment officer, could not be reached for more information.

Additional contributions of $75 million and $25 million, respectively, likely will be made to an unnamed long/short equity hedge fund and a discretionary global macro hedge fund in the first half of 2013. An unnamed emerging markets manager will receive an additional contribution.

Without identifying specific managers or funds, UTIMCO staff also told board members that they likely will redeem all assets from one long/short equity hedge fund and will harvest between $30 million and $60 million from one of the portfolio's large distressed credit mandates as part of rebalancing. Staggered redemptions will continue from one existing emerging markets manager, meeting information said.

The 2013 investment possibilities are numerous, although details of the size of the investments and commitments and timing of hires were not provided, according to UTIMCO's board report.

Asset class assignments being considered include U.S. smidcap, African and Latin American public equities; U.S. office, German and Indian real estate; Indian and Canadian agribusiness funds, Latin American infrastructure and co-investment, and metals and mining funds and co-investments in the real assets portfolio; private equity commitments in the education sector, Texas lower-middle-market buyout funds, and Indonesian and African funds; and two more investments in hedge funds with $500 million or less, and an event-driven “side-car” investment with one of UTIMCO's existing credit managers.

UTIMCO manages the assets of University of Texas System and Texas A&M University System, which totaled $28.4 billion as of Dec. 31. Endowment assets totaled $21.3 billion, and the balance was from operating funds.

Additionally, UTIMCO's transaction report presented Thursday to board members showed a total of $1.1 billion was invested in or committed to new and existing managers and a total of $467 million was redeemed in the four months ended Dec. 31.

Year-end 2012 returns of the university system's two largest endowments — the $13.9 billion Permanent University Fund and the $7.3 billion General Endowment Fund — were 11.18% and 11.33%, respectively.